The population across the Japanese archipelago dropped by around 284,000 to an estimated 127.5 million by October last year, the figures compiled by the government's Internal Affairs and Communications Ministry found.
The number of elderly people aged 65 or over surpassed 30 million for the first time, accounting for as much as 24 per cent of the population – in contrast to children aged 14 and under which decreased to a record low of 13 per cent.
As a result, the elderly officially outnumbered children, with a higher number of over-65s compared to children aged 14 and under in each of Japan's 47 prefectures for the first time.
The new figures confirm Japan's growing reputation as one of the fastest ageing nations in the developed world.
A dwindling birthrate, with deaths continuing to outnumber baby arrivals, combined with the postwar baby boom generation reaching retirement age as well as strict immigration laws are factors fuelling the declining population.
A decline in foreign nationals living in Japan – who were included in the survey – in the aftermath of the nuclear disaster following the 2011 earthquake was also thought to have impacted figures, according to Kyodo news agency.
As many as 40 out of the nation's 47 prefectures suffered a population decrease, with the worst hit being nuclear-hit Fukushima where resident volumes declined by 1.41 per cent.
Akita Prefecture in northern Japan was found to have the highest percentage of people aged over 65, which accounted for more than 30 per cent of its population, the new figures found.
Japan's government faces taking strong measures to tackle the consequences of its ageing society, with a sharp rise in welfare costs and medical care demands forecast in coming years combined with a drop in workforce and national tax revenues.
Private companies are also tapping into the potentially lucrative rise of the "grey" market, with a surge in companies and services targeting the elderly in recent years, from residences and magazines to holidays and apparel.