In response to an increase in the number of elderly people and increasing medical costs, the Japanese government implemented the Long-Term Care Insurance (LTCI) system for the elderly in April 2000. Three years have passed since the LTCI was initiated. The purpose of this paper is to describe the framework, current situation and issues of this system, and the challenges and roles of the LTCI in the future.The numbers of service agencies, institutions, and LTCI service users have been steadily increasing. The waiting list for institutions has also increased, and only half of the users have reached the upper cost limit. Most users were satisfied with the LTCI services. However, the decisions made by the elderly on the types of services to use within the LTCI system are sometimes influenced by their families. The system has some problems regarding the lack of support that is provided to the elderly with respect to their access, choice and use of the LTCI services. Often, care managers cannot devote enough time to the care management process. As a result, important elements of care management, such as conducting home visits to assess users’ conditions, monitoring the care that is received by users, and meeting with other service providers to discuss adequacy of care, are sometimes lacking. Private companies have promoted the quality and efficiency of the home care and long-term care market. The total amount of yearly medical expenses for elderly people in Japan has decreased following the implementation of the LTCI system, compared with that prior to the initiation of the system. LTCI premiums differ among municipalities. The questionnaire that has been used to assess the care requirements of the elderly was deficient in some areas of health. However, in 2003, some amendments were made to this questionnaire in an attempt to address these deficiencies. Furthermore, the LTCI system should have relieved some of the burden on the elderly patient’s family; however, since the implementation of the LTCI, its impact on the burden on the family has not been addressed sufficiently.Although there have been amendments to the system, several challenges of the LTCI system must be considered:ensuring the future financing of LTCI services is met;providing countermeasures to promote the use of home-care services and to alleviate the care burden to family caregivers;providing adequate support and advocacy of rights and decision-making for the elderly;providing educational activities to disseminate knowledge about LTCI programs; andensuring the availability of activities to promote health for the elderly and to prevent them from becoming bedridden.