1,003,532 babies were born the country in 2014, about 26,000 fewer than in 2013, the ministry said; this is reportedly the lowest number of births ever recorded since population statistics began being kept at the end of the 19th century.
The so-called total fertility rate, an average number of children a woman gives birth to during her lifetime, shrank 0.01 points to 1.42, according to the ministry.
The number of deaths in 2014 stood at 1,273,020, the highest-ever in postwar Japan.
The latest statistics show the most considerable population drop since the decline started about eight years ago, a ministry spokesperson said, adding that the figures should prod the government to do more to improve the situation.
Some gloomy forecasts say that the coming decades will see a further drastic decline in Japan's population, which may leave the country with a population of 86 million people in 2060. The current number reportedly stands at about 126,818,019.