Japan's technological capabilities are at or above world levels in many areas that are critical for military systems. Moreover, its spending on military hardware and R&D has grown at double-digit rates since the mid-1970s. This note examines whether the Japanese defense industry could supplant U.S. systems and technology in Japan's force structure and concludes that it could not. Despite their rapid growth, Japan's expenditures for military development and acquisitions are modest compared with those of NATO counties. Aircraft, missiles, and armored vehicles cost up to three times more than comparable foreign systems and lag their performance by as much as a decade. Continued funding restraints, poor incentives, inadequate requirements, and inexperience in the specialized R&D of complex military systems are likely to keep Japan dependent on U.S. military systems.