His career in office had been characterised by financial reform, but his efforts could not prevent the economy's downwards spiral, and he resigned in 1998 after a poor election showing.
By the time he quit, the yen had hit eight-year lows against the dollar, several of the nation's top companies had announced heavy losses in their annual results, and Tokyo had repeatedly found itself at the centre of international criticism for failing to put its economic house in order.
Considered a cunning negotiator, Mr Hashimoto has been described as one of the few politicians capable of arguing on an equal footing with Japan's powerful bureaucrats.
Shrewd negotiator
When he became party president in September 1995, Mr Hashimoto was regarded as a shrewd politician, steering the LDP back to political success after mass defections in 1993 split the party and triggered its first electoral defeat in 38 years.
He went on to become prime minister in January 1996 after the sudden resignation of Socialist Premier Tomiichi Murayama, who led a coalition which included the LDP.
As Prime Minister, Mr Hashimoto pressed ahead with financial deregulation and reform, put security ties with the United States on a firmer footing and resolved a crisis over opposition to US bases in Okinawa.
In his father's footsteps
But his attempt to cut the nation's huge budget backfired when a rise in consumption tax to 5% backfired, leading to a collapse in consumer spending.
Born in 1937, Mr Hashimoto graduated from the elite Keio University, where he studied in political science. He worked at a spinning company for two years before entering parliament at the age of 26 after his father's death.
Mr Hashimoto attributes much of his interest in politics to his father, who was severely crippled by polio as a boy but overcame his handicap to serve as health and welfare minister, a post Hashimoto himself took on in 1978.
Opposition benches
As Transport Minister in the mid-1980s, he oversaw the break up of Japan National Railways into regional companies and a freight company.
He later served as Finance Minister and took part in several gatherings of finance ministers and central bank governors from the Group of Seven.
After the election in 1993, he was relegated to the opposition benches with the rest of the LDP for almost a year.
When the LDP returned to government in a coalition, Mr Hashimoto served as International Trade and Industry Minister before taking the top job.