Evidence has documented the tumor-promoting properties of long non-coding RNA (lncRNA) FOXD2 adjacent opposite strand RNA 1 (FOXD2-AS1) in many cancers. However, little is known about its role in gallbladder cancer. Here, we aimed to characterize the functional relevance of lncRNA FOXD2-AS1 in gallbladder cancer and the possible mechanisms associated with methylation of MutL homolog-1 (MLH1). Initially, microarray-based gene expression profiling of gallbladder cancer was employed to identify differentially expressed lncRNAs. Next, the expression of lncRNA FOXD2-AS1 was examined, and the cell line presenting with the highest lncRNA FOXD2-AS1 expression was selected for subsequent experimentation. Then, the interaction between lncRNA FOXD2-AS1 and MLH1 was identified. The effect of lncRNA FOXD2-AS1 on proliferation, migration, invasion, and apoptosis as well as tumorigenicity of transfected GBC-SD cells was examined with gain- and loss-of-function experiments. We found that lncRNA FOXD2-AS1 was highly expressed, while MLH1 was poorly expressed in gallbladder cancer cells. Besides, lncRNA FOXD2-AS1 could promote MLH1 methylation by recruiting DNMT1 to the MLH1 promoter, and consequently inhibit MLH1 transcription. Silencing of lncRNA FOXD2-AS1 or overexpression of MLH1 inhibited gallbladder cancer cell proliferation, invasion, and migration, while facilitating cell apoptosis in vitro as well as retarding tumor growth in vivo. Thus, silencing of lncRNA FOXD2-AS1 suppressed the progression of gallbladder cancer via upregulation of MLH1 by inhibiting MLH1 promoter methylation. These findings present lncRNA FOXD2-AS1 knockdown as a potential candidate for the treatment of gallbladder cancer.