The Nikkei 225 gains as much as 1 percent after breaking a 1989 record last month.
Japan's benchmark stock index surpassed the 40,000 mark for the first time, continuing its recovery after decades of stagnation.
The Nikkei 225 gained 1 percent to 40,308.85 during early trading Monday, as investors took a bullish view of Japanese companies following gains on Wall Street.
Technology stocks, including Tokyo Electron and Advantest, were among the biggest gainers.
Japanese stocks have become some of the most popular buys over the past year as foreign investors take advantage of the cheap yen and corporate governance reforms that have boosted returns for shareholders.
The Nikkei is up more than 28 percent in 2023, outperforming the S&P 500 in a banner year for the U.S. stock market.
Last month, the benchmark index surpassed its 1989 record of 38,915.8, set when Japan's economy was on the brink of an asset crash that began several “lost decades” of economic stagnation.
The revitalization of the Japanese stock market comes amid a sustained rally in U.S. stocks fueled by enthusiasm around advances in artificial intelligence.
American technology companies have soared in value in recent months, with chipmaker Nvidia's market capitalization surpassing $2 trillion on Friday.
Japan's overall economy has not matched the fortunes of its stock market, with structural challenges, including a shrinking population and a rigid workforce, weighing on growth.
Last month, Japan's economy officially entered recession, ceding its place as the world's third-largest economy to Germany.
