The new framework will be centred around a panel made up of the prime minister, the chief cabinet secretary and the foreign and defence ministers, who will have decision-making powers over mid and long-term policies on diplomatic and national security matters.
Establishing an NSC has been a priority for conservative Prime Minister Shinzo Abe since he came to power last December, and comes as Tokyo is involved in an increasingly bitter stand-off with Beijing over the sovereignty of an island chain.
Aircraft entering the zone must obey Beijing's orders, it said, or face the threat of military action.
The move has been condemned as "inflammatory" around the world and Japan and the US have vowed to ignore it.
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Abe's ruling coalition pushed a controversial state secrets bill through the lower house of parliament yesterday.
It will give Tokyo far broader powers in deciding what constitutes a state secret, and severely punish those who leak the information.
Critics say the bill is draconian and will infringe press freedom and the public's right to know.