Genome rearrangements, a hallmark of cancer, can result in gene fusions with oncogenic properties. Using DNA paired-end-tag (DNA-PET) whole-genome sequencing, we analyzed 15 gastric cancers (GCs) from Southeast Asians. Rearrangements were enriched in open chromatin and shaped by chromatin structure. We identified seven rearrangement hot spots and 136 gene fusions. In three out of 100 GC cases, we found recurrent fusions between CLDN18, a tight junction gene, and ARHGAP26, a gene encoding a RHOA inhibitor. Epithelial cell lines expressing CLDN18-ARHGAP26 displayed a dramatic loss of epithelial phenotype and long protrusions indicative of epithelial-mesenchymal transition (EMT). Fusion-positive cell lines showed impaired barrier properties, reduced cell-cell and cell-extracellular matrix adhesion, retarded wound healing, and inhibition of RHOA. Gain of invasion was seen in cancer cell lines expressing the fusion. Thus, CLDN18-ARHGAP26 mediates epithelial disintegration, possibly leading to stomach H+ leakage, and the fusion might contribute to invasiveness once a cell is transformed.