Japan's rising health expenditure, driven by an aging population, coincides with growing demands for increased spending. Reducing smoking-related costs could alleviate the burden on the health care system. Despite efforts to promote smoking cessation, success has been limited, indicating a need for strategies beyond cessation. Using a status quo simulation based on hospital resource data from the Japanese Ministry of Health, Labor, and Welfare, we examine the impact of heated tobacco products (HTPs) on the prevalence of four smoking-attributable diseases (chronic obstructive pulmonary disease, ischemic heart disease, stroke, and lung cancer) and the related direct health care costs. The baseline scenario assumes a 50% switch from combustible cigarettes to HTPs, with a 70% risk reduction. A sensitivity analysis was conducted to assess the effects of parameter variations. If 50% of smokers replaced combustible tobacco products with HTPs, 12 million patients could be averted equivalent to JPY 454 billion in health care savings. Prefectures located in the north and south of Japan would benefit the most. Considering the heterogeneous prevalence rates, a one-size-fits-all tobacco control approach is ineffective. Japan should prioritize cost-efficient measures that promote public health and economic benefits. Encouraging smokers to switch to reduced-risk products, raising awareness of health risks, and adopting a harm-based taxation model can drive positive change. Public-private partnerships can further enhance harm reduction efforts. With a combination of tax reforms, revised regulations, collaborations, and ongoing research, Japan can create a more effective and comprehensive approach to tobacco control.