In Japan, a large gap between the building size allowed by the land use regulation and those in surrounding area often results in conflicts between developers and neighborhood residents. To bridge the gap, it is necessary to designate the detailed district plan in neighborhood level to preserve and improve living environment. In such cases, it is effective to apply the Urban Planning Proposal System as part of the resident-initiated planning activity. This paper aims to define the conditions for effective applications of the Urban Planning Proposal System. It conducts a questionnaire survey to prefectural and municipal governments throughout the country in order to analyze the applications of the Urban Planning Proposal System. Then, it examines the proposals that are applied as part of the resident-initiated planning activity in order to preserve and improve living environment in their neighborhood. The questionnaires are sent to 649 municipalities and 47 prefectures on 2nd September, 2014 and answered by 518 municipalities, 79.8% of collection rate, and 46 prefectures, 97.9% as of 30 November, 2014. More than half of local governments recognize the positive effects of the Urban Planning Proposal System. They expect the designation of the detailed plans which are different from the governments' plans and the change in residents' attitude towards planning. On the other hand, majority of municipalities and prefectures do not provide sufficient support for residents to make planning proposals. Only 10 % of municipalities attend community meetings and help plan making. There are about 300 proposals throughout the country. 87 proposals are for the deregulation to promote the urban development projects initiated by developers. 46 proposals are for the regulations to preserve and improve living environment by resident-initiatives. Then, the paper conducts a case study on 21 successful proposals in 10 municipalities and 3 unsuccessful proposals by interviews with officers and, if possible, officers who supported proposals. It also interviewed with residents in 4 cases. In the cases that achieved the district plan designation or the zoning amendment from the resident-initiated planning proposal, three conditions are observed. Firstly, there are dedicated community leaders who commit the whole process. To designate the plan from the proposal, it is necessary to achieve higher level of consensus on the plan. To build consensus, the leaders work consistently to explain why they need the plan to their community. They also revise the details of proposals many times to reflect people's opinions. In addition, active support for plan making and planning document preparation by the municipal government is a key factor to promote the planning proposals. The financial support for consensus building and land owner survey, the attendance of officers in the community meetings and study groups and the preparation planning documents are effective. Finally, the flexible application of planning system is necessary. The resident-initiated planning proposal contains great details which are different from the governments' plan, since it reflects the community's opinions in the plan. To take the advantage of the residents' proposals, it is important to have flexibilities in plan making including the details of restriction and the rule of regulation boundary.