A bill to improve support for mental health patients after their discharge from hospital was approved by the Cabinet Tuesday.
The move is intended to prevent incidents similar to the stabbing rampage last year by an assailant with a history of psychiatric treatment.
The proposal will apply to those discharged after involuntary admission to hospital due to risks of committing self-harm or hurting others.
Municipalities will be required to draw up individual support plans during hospitalization and after discharge.
Last July, Satoshi Uematsu, 27, killed 19 people and injured dozens of others at Tsukui Yamayuri En, a facility for the mentally disabled in Sagamihara, Kanagawa Prefecture.
Experts have pointed to Uematsu's lack of follow-up treatment after he had been released from hospital.
Uematsu, a former employee of the care facility, quit his job in February last year following an outburst in which he expressed his desire to euthanize the disabled.
Local governments will be required to set up councils to outline plans to provide follow-up care for people involuntarily hospitalized for mental illness.
In addition to providing consultation and guidance, they will also be required to share information with other local governments when a patient changes residence.
According to the health ministry, the councils will ask members of support organizations for the mentally ill to join discussions. They will also consult with police in cases where there is a risk a patient may commit a crime.