Japan has summoned a senior Chinese diplomat to issue a formal protest over a submarine spotted inside its waters earlier this week.
The submarine was tracked by the Japanese navy
Japan earlier said it was sure the submarine was Chinese because of its type and apparent direction.
Japan's navy was put on alert for the first time in five years to chase it.
The incident is likely to further raise tensions between Japan and China, already locked in disputes about contested islands and gas fields.
"We made a strong protest and demanded an apology," Japanese Foreign Minister Nobutaka Machimura said after meeting Chinese embassy official Cheng Yonghua. China's ambassador to Japan was reportedly out of Tokyo.
Mr Machimura asked for an explanation and asked China to ensure a similar incident did not
Mr Cheng replied that he would first report to Beijing, Mr Machimura said.
The Chinese foreign ministry is reported to have convened an emergency meeting to discuss the issue.
Japan's cabinet spokesman Hiroyuki Hosoda said Japan's reaction depended on the Chinese government's response.
"We have to take into consideration many things, such as how China responds and Japan's public opinion" he said. "The question is how we deal with this issue in the big picture."
Japan's Prime Minister Junichiro Koizumi has called the incident "regrettable".
Although the sub did not surface, Japanese media said it had been identified by its cruising sound.
The vessel was first spotted near the Sakishima islands, which lie about 120km (75 miles) south of the disputed Senkaku islands - known as the Diaoyu in Chinese.
The incident comes at a time of heightened tensions between the two countries, which are likely to become increasingly competitive in their hunt for natural resources to power their economies.
The two sides held inconclusive talks last month on gas exploration projects in the East China Sea.
China has also reportedly been angered by a Japanese defence ministry paper which speculated on reasons China might attack. It cited disputes over natural resources and territory, as well as a wider conflict involving Taiwan.
The last time Japan ordered such a high maritime alert was in 1999, when two suspected North Korean ships entered its waters.
In December 2001, a suspected North Korean spy ship sank off Japan after a shoot-out with Japan's coast guard.