Both nations went through a difficult period in World War II when the then Dutch East Indies was occupied by the Imperial Japanese Army for three-and-a-half years.

Today in Indonesia, there are about 11,000 Japanese expatriates whereas in Japan, there are approximately 24,000 Indonesian nationals working and training.

The majority was sent to Jagatara (Jakarta) and are still remembered by the locals as the people who wrote the poignant letters which were smuggled across the sea to their homeland.

The Japanese seized the key oil production zones of Borneo, Java, Sumatera, and the Netherlands New Guinea (the modern day Indonesian province of Papua, which was also conveniently abundant in highly valuable copper) of the late Dutch East Indies, defeating the Dutch forces and were welcomed by many as liberating heroes by Javanese natives.

The experience of the Japanese occupation of Indonesia varied considerably, depending upon where one's location and social position.

Many thousands of people were taken away from Indonesia as forced laborers, or romusha, for Japanese military projects where there was a very high death rate.

[14] After the end of Japanese occupation, roughly 3,000 Imperial Japanese Army soldiers chose to remain in Indonesia and fight alongside local people against the Dutch colonists in the Indonesian National Revolution; roughly one-third were killed, of whom many are buried in the Kalibata Heroes' Cemetery, while another third chose to remain in Indonesia after the fighting ended, some of them becoming decorated as Indonesian independence heroes.

[2] The bilateral diplomatic relations between Republic of Indonesia and Japan officially established in April 1958.

[3] Japan has been investing in Indonesia for decades, particularly in the automotive, electronic goods, energy, and mining sectors.

Prior to the formation of the Indonesian Republic, the Japanese had viewed Indonesia as an important source of natural resources.

The Japanese need of natural resources was among the reasons that led the nation to advance further to the south in their military conquests during World War II.

Japanese restaurant chains such as Ootoya, Yoshinoya, Sukiya and Ebisu Curry, fashion, retail and household appliances stores such as Sogo, AEON and MUJI, and bookstores such as Books Kinokuniya have recently entered the market in Indonesia.

[20] On 20 October 2020 during the COVID-19 pandemic, then-Japanese Prime Minister Yoshihide Suga visited Indonesia,[21] and pledged low-interest loans of ¥50 billion ($473 million) to Indonesia in talks with the Southeast Asian nation's President Joko Widodo to help it cope with the economic fallout from the coronavirus pandemic.

[23] As a result of the high number of Japanese–style businesses and entertainments, the area around Blok M and Melawai Raya Street have come to be known as Jakarta's "Little Tokyo".

[24] In 2014, Japanese government abolished visa requirements for Indonesian citizens who possess an ordinary biometric passport in an effort to increase people-to-people exchanges between Japan and Indonesia.

Among ASEAN countries, Indonesia is the largest Japan's Official Development Assistance recipient.

Despite historical Japanese military aggression against Indonesia, mutual fear of an increasing Chinese threat has spurred the two nations to move relations into the defense sector.

[29] In July 2022, Japan joined the United States and Australia in an Indonesian military exercise focusing on freedom of navigation.