Chronic atrophic gastritis (AG) is initiated mainly by Helicobacter pylori infection, which may progress to stomach cancer following the Correa's cascade. The current treatment regimen is H. pylori eradication, yet evidence is lacking that this treatment is effective on later stages of AG especially gastric gland atrophy. Here, using AG mouse model, patient samples, gastric organoids, and lineage tracing, this study unraveled gastric stem cell (GSC) defect as a crucial pathogenic factor in AG in mouse and human. Moreover, a natural peptide is isolated from a traditional Chinese medicine that activated GSCs to regenerate gastric epithelia in experimental AG models and revitalized the atrophic gastric organoids derived from patients. It is further shown that the peptide exerts its functions by stabilizing the EGF-EGFR complex and specifically activating the downstream ERK and Stat1 signaling. Overall, these findings advance the understanding of AG pathogenesis and open a new avenue for AG treatment.© 2024 The Authors. Advanced Science published by Wiley‐VCH GmbH.