"Inflicts damage equal to the user's remaining HP. User faints." -Pokemon db
So yes, the user faints when you use it. The idea is that you don't have much benefit from it when your Hp is low, since it won't do much damage. But If your pokemon uses it early, it will do more damage, but you wasted a perfectly healthy teammate. You really have to take a risk with this move, hence the name, Life Gamble.