Victoire Pisa, ridden by Italian Mirco Demuro for trainer Katsuhiko Sumii, won by half a length from fellow Japanese-trained Transcend, a 40-1 outsider who had made much of the running.
Third place in the field of 14 went to another 40-1 shot, Monterosso, one of three runners in the race for the Godolphin stable of Sheikh Mohammed.
It was the first time a horse trained in Japan has won the event, which was first contested in 1996 and is a likely morale-booster for a country ravaged by recent tragedies.
English raider Twice Over, sent off the 2-1 favorite in London betting, again fared badly from an outside draw and finished ninth after running 10th last year.
Victoire Pisa came to the race with sound credentials after a close-up seventh in last year's Prix de l'Arc de Triomphe and a good third in the Japan Cup but was racing on a synthetic surface for the first time.
Demuro managed to get his horse into a handy position after a poor start and held on well in the straight from the gallant Transcend, ridden by Shinji Fujita for trainer Takayuki Yasuda.
Demuro, who has ridden in Japan for 13 years, said in post-race comments released by the organizers: "My horse usually gets a good start, but this time he hit his head in the stall and we had a bad start.
"But maybe it was lucky because there was a slow pace on the backstretch so I could find a good position close to the leader. It was a really tight finish." Fujita said: "I'm very happy with this result because the people in Japan are having a difficult time at this moment, so we're very happy."
Buena Vista, the other Japanese rider, started 7-1 third favorite but could do no better than eighth with her top English jockey Ryan Moore saying: "The race played out terribly." Tom Queally, rider of favorite Twice Over, said: "It was a messy race for everyone and I never got into it at any stage." Winning trainer Sumii, who may race Victoire Pisa next in Hong Kong, said: "In this time when Japan is going through a tough time, I felt the whole country was behind me."
