Following the Meiji restoration, the area was organized into villages within Akasaka and Iwanashi Districts of Okayama Prefecture with the creation of the modern municipalities system on April 1, 1889.

Akaiwa has a mayor-council form of government with a directly elected mayor and a unicameral city council of 18 members.

In terms of national politics, the city is part of the Okayama 1st district of the lower house of the Diet of Japan.

Horticulture, especially then cultivation of peaches and grapes, and production of agricultural machinery are important to then local economy.

Akaiwa is one of three remaining places in Japan that produces the bamboo stalk for fude ink brushes.