An API gateway in microservices architecture serves as a single entry point for client requests to access multiple backend services. It processes requests by routing them to the appropriate microservices based on the specific API endpoints defined. API gateways handle various functions, including authentication, load balancing, and response transformation. This allows for improved security and management of API traffic, as well as simplified communication between client apps and microservices. Overall, an API gateway enhances system efficiency and eases the complexities of microservices deployment.