We aimed to determine the effect of 'Xiaozeng No. 1' (XZ-1) on cellular apoptosis changes of gastric epithelial dysplasia (GED) and to explore the underlying mechanism. Specimens taken from the pyloric area of the stomachs from rats in each group were subjected to Hematoxylin and Eosin (H&E) staining for pathological examination, TUNEL staining for apoptosis detection, and Western blot analysis for apoptosis-related proteins. The results showed that XZ-1 decreased GED incidence and enhanced gastric epithelial apoptosis. Furthermore, XZ-1 up-regulated the proapoptotic proteins including cleaved caspases (cysteine-dependent aspartate-specific protease) (-3, -8, and -9), Fas, Bax, and Bid, and facilitated the release of cytochrome c from mitochondria to the cytoplasm. Interestingly, XZ-1 enhanced protein expression of NF-kappa B p65, Ki67, and p53. Moreover, inhibition of NF-kappa B pathway suppressed the XZ-induced p53 expression, whereas inhibition of NF-kappa B or p53 pathway suppressed the XZ-induced Ki67. More importantly, inhibition of NF-kappa B or p53 pathway attenuated the XZ-1-mediated induction of gastric epithelial apoptosis and decline of GED incidence. Collectively, our results demonstrated that XZ-1, almost equivalent effect exerted by the positive control Retin-A, dramatically decreased GED incidence and enhanced gastric epithelial apoptosis. Meanwhile, XZ-1 activated the NF-kappa B/p53/Ki67-apoptosis signaling pathway, which might be one of the mechanisms whereby XZ-1 reversed GED.