The law, designed specially for the current emperor, would allow Emperor Akihito to be the first Japanese emperor that relinquishes the throne in around 200 years.
Prime Minister Shinzo Abe announced the timing of what will be the first abdication by a Japanese monarch in around two centuries.
After the emperor abdicates, his elder son Crown Prince Naruhito will ascend the throne on May 1, 2019.
"I feel deep emotion that today, the opinion of the Imperial Household Council was smoothly decided and a big step was taken toward the imperial succession". According to the Japanese Constitution, the emperor has a merely ceremonial role, being a symbol of the nation and of national unity.
A special panel will discuss possible dates on Friday, with the cabinet to make a final decision.
The 83-year-old monarch took over the throne following his father Emperor Hirohito's death.
TOKYO: Emperor Akihito will hand over all public duties to his heir after retiring in what will be Japan's first abdication in almost two centuries, the monarch's younger son said, responding to worries a former emperor might weaken his successor's status.
In the past year, 83-year-old Emperor said that his age and health condition was the reason that it is hard to carry out their duties.
In Tokyo and across the country the announcement made jaws drop, prompting special editions of newspapers and dominating television and radio bulletins.
In 1992, he became the first Japanese monarch in living memory to visit China, where bitter memories of the war run deep.
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