Emperor Akihito's planned abdication - the first by a Japanese monarch in about two centuries - should take place on April 30, 2019, a special panel chaired by Prime Minister Shinzo Abe agreed on December 1.
Akihito, who will be 85, said his age was a concern.
After his abdication, Emperor Akihito will be called "joko" and Empress Michiko, 83, will be given the title of jokogo, with the crown prince ascending the throne and taking over the duties of emperor.
The decision was made Friday at a meeting of the Imperial House Council, which was chaired by Prime Minister Shinzo Abe and included parliamentary leaders, supreme court judges and imperial family members.
Japan's Emperor Akihito poses with Empress Michiko in 2015.
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A special panel will discuss possible dates on Friday, with the cabinet to make a final decision. The era of the reign of the new Emperor would start on 1 may. It was needed because the 1947 Imperial House Law does not provide for abdication.
Japanese Emperor Akihito ascended to the throne after the death in 1989 of his father Hirohito, posthumously known as Emperor Showa.
The government was required by law to hear the council's views before formally deciding the date, most likely next week.
A one-off bill was passed for his abdication this year after the Emperor told the nation that he was finding it hard to carry out his duties, owing to his age and waning reflexes.
Under the postwar Constitution in Japan, the emperor, once considered divine, is defined as "the symbol of the state" with no political power. The current male-only succession rules prohibit women from succeeding to the Chrysanthemum Throne and female members lose their royal status when they marry a commoner.