Japan is to launch a tender for fighter jets in the coming weeks in a deal that will be worth up to $40bn (£30bn) as Tokyo seeks to bolster its air defences amid creeping tension with China over disputed maritime borders.
Japan will contact foreign and domestic defence contractors soon after a 5 July deadline for expressions of interest in the tender for around 100 warplanes.
US firms Boeing and Lockheed Martin have reportedly already been invited to take part in the project - dubbed the F-3 fighter jet programme - alongside Japan's Mitsubishi Heavy Industries, the prime domestic contractor.
A final decision is not likely to be reached until summer 2018, with deployment due at the end of the 2020s at the earliest. Employees familiar with the matter have declined to be identified because the matter was confidential.
The F-3 programme will dwarf most recent fighter jet deals in value, likely attracting global contractor interest. Analysts say Japan's preference for an aircraft that can operate closely with the US military, given close Washington-Tokyo ties, makes a non-US option a long-shot.
Japan is seeking to maintain air superiority over China, now asserting itself in regional maritime disputes.
Although China's warplanes still lag behind those aircraft used by the US and its allies, Beijing has been improving its capability according to military experts, which is making the Japanese government nervous.
Touted as a replacement for existing Mitsubishi F-2 multi-role fighter jets, the new home-grown aircraft will operate alongside Lockheed F-35 fighters that Japan has on order, as well as Boeing F-15Js jets that it is upgrading.
Japan is open to importing existing fighter jets directly from Western suppliers, producing them under licence at home, like the F-15Js, according to the people familiar with the matter.
"We are certainly interested in another potential opportunity to bolster our longstanding partnership with Japan," Lockheed Martin said. "We look forward to learning more about Japan's F-3 plans as discussions progress."
Japan has a long-standing interest in acquiring a twin-engined stealth aircraft with long-range capability and internally-stowed missiles, according to the people with knowledge of the F-3 programme.
The only aircraft now in service that meets those requirements is Lockheed's F-22, although that jet is no longer in production and the US has not made it available for export despite Tokyo's interest.
That makes Japan more likely to design and make the F-3 fighter at home, according to the people with knowledge of the matter, ramping up the project's cost.
High development costs could be a barrier for Japan as it weighs its national budget, though its move to lift a decades-long ban on arms sales last year could potentially pave the way for future export sales to ease the cost burden.