The planned 2.6% increase over five years reverses a decade of decline and marks the clearest sign since Prime Minister Shinzo Abe took office a year ago that he wants a bigger military role for Japan as tension flares with China over islands they both claim.
Mr Abe's top priority has been reviving the nation's long-sluggish economy. However, he has also pledged to strengthen Japan's military and boost its security profile to meet what he says is a threat from China's rapid military build-up and recent actions to back its claims to Japanese-held islands in the East China Sea.
The national security strategy stated: "China is attempting to change the status quo by force in the skies and seas of the East China Sea and South China Sea and other areas, based on its own assertions, which are incompatible with the established international order.
"China's stance toward other countries and military moves represent a concern to Japan and the wider international community."