Text messages and whooping alarms were sent to the phones of millions in and around the Japanese capital, warning: "A quake has occurred off Ibaraki. Prepare for strong jolts."
But officials suspect the early alert, issued by the Japan Meteorological Agency, was triggered by two minor earthquakes hitting the archipelago at nearly exactly the same time.
A 4.4-magnitude quake struck off Ibaraki, northeast of Tokyo, in the Pacific at 11:02 am (0202 GMT).
Even Prime Minister Shinzo Abe was caught off-guard by the false alarm -- with TV footage showing him checking his flip phone as alarms echoed in the prime minister's office ahead of a cabinet meeting.
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An alert also flashed on public broadcaster NHK as its announcer warned viewers: "Protect yourself. Stay away from unstable furniture."
The warning forced train and subway operators in the capital to suspend services temporarily, while elevators -- including those of Tokyo Tower -- stopped, local media reported.
"We suspect that the system overestimated it by calculating the two separate quakes as one big quake," an official said, adding that the agency was further investigating the cause.
Japan launched the world's first earthquake early warning system in 2007, giving residents vital extra seconds before a major quake hits.
The country sits at the junction of four tectonic plates and experiences a number of relatively violent quakes every year.
A 9.0-magnitude earthquake in March 2011 triggered a massive and deadly tsunami, which smashed into the Fukushima nuclear power station and sparked the world's worst atomic accident since Chernobyl in 1986.
But the agency has also wrongly issued the early warning system in the past, sparking unnecessary confusion and complaints.