According to the statistics published by the National Tax Agency of Japan, the total amount of taxable income assessed by transfer pricing assessments almost tripled from administrative year 2003 through administrative year 2004, and further increased by 130% in the following administrative year. Nevertheless, there have only been a few court decisions in Japan dealing with transfer pricing since 1986, when the transfer pricing regulations were introduced. This article discusses two recent transfer pricing cases in Japan and comments on the Matsuyama District Court decision of 14 April 2004 and on a Tokyo District Court final decision of 26 October 2006. The article ends with the authors' observations and conclusion.