Toyota's Prius is the world's best-selling hybrid car
Toyota is hiring 800 contract workers in Japan, its first increase in jobs in more than a year.
The Japanese carmaker said this was due to higher demand for its Prius petrol-electric hybrid in Japan.
Toyota now employs 1,300 contract workers in Japan, who are distinct from the 70,000 full-time workers that have guaranteed lifetime employment.
Toyota, struggling with the global downturn in auto sales, had stopped employing contractors last June.
The majority start work next month at its Tsutsumi plant in central Japan, which makes the Prius and other models for the Japanese market.
The Prius, launched in 1997, is now in its third generation. By the end of April, Toyota had sold 1,028,000 of the cars worldwide, more than half of them in North America.
At its peak in 2005, Toyota employed over 11,600 contract workers - who are hired for fixed periods of employment.
The announcement came amid data showing Japan has been hit by weaker exports, as overseas markets cut back on buying Japanese items such as cars.
The finance ministry said the surplus in the current account - the broadest measure of trade - fell at an annual rate of 19.4% in July to 1.27tn yen ($13.5bn).
Exports dropped 37.6% from a year earlier to 4.6tn yen.
"Sluggish exports dragged down the surplus," said Hideki Matsumura, an economist at the Japan Research Institute. "Exports were weak in every key region, underlining that a recovery in the global economy has yet to become solid."
Other data showed that Japanese bank lending grew at the slowest pace in a year in the 12 months to August.