In one of the biggest changes to Japanese security policy since the war, the Cabinet approved a reinterpretation of the constitution on military affairs.
The contentious move will allow the military to help defend other nations in what is known as "collective self-defence."
Previous governments have said that Japan's war-renouncing constitution limits the use of force to defending Japan.
Prime Minister Shinzo Abe, in a televised news conference, said the shift is intended to protect the lives and security of the Japanese people. For example, he said, Japanese warships would be able to help protect US ships that were fighting to defend Japan.
"For 70 years, Japan has kept its peace with its constitution," said 67-year-old protester Toshio Ban. "What are we to do with that stupid man trying to trample over the precious constitution?"
Abe, who has made raising the country's military profile a cornerstone of his nationalist policies, pushed hard for the change. He cited a deteriorating security environment, notably China's military rise and North Korea's missile and nuclear threats.