The number of babies born in 2002 fell to a record low of 1.15 million, down about 17,000 from a year earlier.
The birthrate likewise hit an all-time low of 1.32 in 2002, down from 1.33 in 2001, according to a Health, Labor and Welfare Ministry report released Thursday.
The rate had increased to 1.36 in 2000, and the brief uptick is thought to have been triggered by the "millennium effect."
The birthrate represents the average number of babies born to a woman in her lifetime. The latest survey confirms that the declining birthrate is proceeding on a long-term basis, analysts said.
The 2002 birthrate is lower than a government estimate compiled in the ministry's projection of Japan's population by 2050, the ministry said, adding that the latest data show the projection was overly optimistic.
The government uses the estimates as a basis for calculating pension premiums and setting other social security policies.
Confirmation that the population is shrinking faster than expected will no doubt affect discussions on revising the public pension system, the analysts said.
The ministry statistics show 1,153,866 babies were born last year, down 16,796. It was the first time in nine years that the birthrate fell for two straight years.
The average age for first marriages for women in 2002 increased slightly to 27.4 from 27.2 the previous year. The average age of mothers giving birth to their first child also rose, to 28.3 from 28.2 over the same time span. The number of couples getting married in 2002 fell by nearly 40,000 to 757,331. This marks a sharp contrast to 2001, when there was a "new millennium" wedding rush.