Roots of Astragalus membranaceus (A. membranaceus) (Astragali Radix, AR) has been used as a herbal medicine for gastrointestinal disorders in China, Korea, Japan, and other Asia countries. In this study we investigated the effects of the AR 70% ethanol extract and compounds isolated from AR on gastritis in rats and growth of human gastric cancer cells. AR 70% ethanol extract showed the potent acid-neutralizing capacities and partly cytotoxicity of Helicobacter pylori and human AGS gastric cancers cell. Astragaloside I and daucosterol, which were isolated from AR, significantly inhibited HCl/ethanol-induced gastric lesions. In addition, daucosterol increased the mucus content to almost the same as the positive control. The results of this study suggest that astragaloside I and daucosterol may be good candidates for the development of new drugs or neutraceuticals which can be used for the treatment or prevention of gastritis.