Embattled economic minister Akira Amari on Thursday resigned over a graft scandal involving the misappropriation of funds within his office, dealing a hard blow to Prime Minister Shinzo Abe's Cabinet.

The resignation of Amari — a key engineer of Abenomics and mastermind of Japan's successful bid last year to reach a landmark 12-nation Trans-Pacific Partnership free trade agreement — will considerably delay the expected ratification of the deal by the Diet.

Later in the day, Abe named former environment minister Nobuteru Ishihara as Amari's successor. The quick replacement was formalized in the evening through an attestation ceremony at the Imperial Palace.