Faced with rapidly rising healthcare costs, aging populations and healthcare technology growth, coupled with a decline in economic growth, all developed countries have introduced reforms to their healthcare systems. Since Japan's healthcare system is thought to achieve good health at low cost, the evaluation of present issues and efforts involved in healthcare reform in Japan will offer a unique lesson for other countries. While Japan's healthcare system has achieved accessibility and equity of healthcare, the most serious problem it faces is unassured quality of healthcare. In Japan, a large number of healthcare technologies have been introduced and utilised uncritically. Several systematic assessments have been carried out, and shed light on the present situation of quality of healthcare. However, the Japanese government has no explicit health policy to comprehensively evaluate effectiveness and efficiency of healthcare technologies and their use. To cope with this issue under limited healthcare expenditures, a systematic approach to healthcare evaluation such as healthcare technology assessment is urgently needed. The highest priority will be placed on pharmacoeconomic evaluation in Japan, and this will serve as a typical model for healthcare evaluation in Japan. The Japanese government is required to make clear its objectives and strategies in using systematic evaluations for health policy making.