Fault segmentation models have been developed by using various types of information about faults, including both geological and geophysical data, in order to predict the size of future cascade earthquakes. In these models, however, stress conditions within the fault systems have not been considered in sufficient detail. Major fault systems generally exhibit heterogeneous stress conditions. The Median Tectonic Line active fault system (MTLAFS) is the longest and most active arc‐parallel, right‐lateral, strike‐slip fault system in Japan. The stress conditions along the MTLAFS change from transpression on eastern Shikoku Island to transtension on Kyushu Island. The change of stress conditions along the fault system is caused by the counterclockwise rotation of the Nankai fore‐arc sliver in response to the relative motion of the Philippine Sea and Eurasian tectonic plates and back‐arc spreading in the Okinawa trough. Here, we propose “stress condition segmentation” as a concept that deals with the diversity of stress conditions and can be applied in seismic hazard assessment. According to this concept, the MTLAFS is divided into three segments: the East Shikoku, West Shikoku, and Kyushu segments. The East Shikoku and Kyushu segments are under compressional and tensional stress conditions, respectively. Stress in the West Shikoku segment, which is between the other two segments, is transitional from compressional to tensional conditions. In particular, change in the magnitude of fault‐normal stresses along strike is one of the key factors that govern the geometry of fault discontinuities, rupture propagation and termination, and, consequently, fault segmentation. Application of our stress condition segmentation concept to the MTLAFS suggests that future earthquakes in the West Shikoku and Kyushu segments will be of lower energy than those in the East Shikoku segment.