Despite its small size and modest exports, the Japanese commercial aircraft industry has attracted considerable attention in recent years. Among the reasons for this interest are Japanese performance in other export-oriented industries; the development of a complex web of collaborative arrangements that link a number of large U.S. aerospace firms with Japanese enterprises in the development and production of advanced commercial airframes and engines; and the announcement by Japan's Defense Ministry that domestic firms would undertake a leading role in cooperation with General Dynamics in developing the FSX military fighter. This paper reviews the development of and prospects for the Japanese commercial aircraft industry, concluding that the current dominance of global markets for commercial aircraft engines by U.S. and British firms does not appear to be threatened by an emerging Japanese competitor; nor are the positions of Boeing, Airbus Industrie, and McDonnell Douglas within large commercial transports likely to be affected by developments in Japan during the next three decades.