Japanese special education is based on the principle of remedial education system. This special needs education was basically for students with severe disabilities for many years. Education for students with developmental disorders in Japan is almost a new concept whereas other developed countries have initiated this long time ago. This article explains chronological history, prevailing situation and issues of education for students with developmental disorders in Japan. The article also delineates the way in which the Japanese special education in Japan. The article also delineates the way in which the Japanese special education system was moved into special needs education in the light of challenges of 21st century The recent development, initiatives and the effective future directions in this regard are also described in this paper.