Japan says it aims to erect a missile defence shield as quickly as possible, to counter the threat from North Korea.
Japan began deploying surface-to-air missile batteries in March
In its annual report, the defence ministry warns that Pyongyang is now producing sophisticated weapons.
It also says that one of the prime objectives of the Japanese military is to conduct peacekeeping missions.
While many people in Japan welcome attempts to increase its international role, others fear a more assertive Japan may trigger a regional arms race.
Japan was shocked when North Korea tested a nuclear weapon last autumn, according to the BBC's correspondent in Tokyo, Chris Hogg.
The fact that Pyongyang has test-fired several short-range ballistic missiles in the past month has only increased concern, our correspondent says.
Japan's troops are joining more and more international missions
One US expert described these tests as successful launches of an advanced weapon.
So in its annual report, Japan's defence ministry is clear about the need to complete the country's missile defence shield without delay.
"North Korea is improving its capability of managing ballistic missiles. It is considered that North Korea is trying to further extend their firing range," the document says.
"It is necessary to finish deploying a ballistic missile defence as quickly as possible."
Mobile surface-to-air missile batteries were delivered to bases near Tokyo in March, and the US installed Japan's first anti-missile system on the southern island of Okinawa last year.
Japan's first ship equipped with ballistic missile interceptors will come into service before the end of 2007.
As it has done many times in the past, Japan has also used this report to express concern over the difficulty in obtaining accurate information about China's military build-up.
"There are fears about the lack of transparency concerning China's military strength," the paper says.
"In January this year China used ballistic missile technology to destroy one of its own satellites. There was insufficient explanation from China, sparking concern... about safety in space as well as the security aspects."
China's defence minister is due to visit Japan later this year - the first such visit in almost a decade.
During the visit, he is likely to be pressed to reveal more about China's military intentions.
But Japan's neighbours will, no doubt, also be unsettled by the description in the paper of international peacekeeping as a key mission for the self-defence forces, our correspondent adds.
"International peace co-operation activities are a primary mission," said defence ministry spokesman Mamoru Kotaki as the report was launched.
Though its is one of the world's strongest and best-equipped militaries, Japan's Self-Defence Forces are currently constrained by the nation's 1947 constitution, which limits them to a strictly defensive role.
But many Japanese critics, and regional neighbours, fear the troops' purely pacifist function is being ignored as Japan's role as an international peacekeeper increases.