Summary: The US-Japan relationship in science and technology is undergoing significant changes which present dilemmas for policymakers, business people, and researchers in both countries. The global context is changing, particularly in the dynamic economies of East Asia and in Europe. At the core of the significant changes, however, is Japan’s emergence as a technological superpower. From the perspective of the United States, a major challenge is to develop mechanisms for acquiring technological know-how from Japan and to bring that knowledge to bear in increasing the competitiveness of manufacturing and service industries. Japan, on the other hand, faces challenges in developing basic research capabilities and mechanisms for transferring technology to the rest of the world. Developing effective responses to these challenges should be a top national priority.