The Financial Supervisory Agency, which was in charge of inspections and supervision of financial institutions and surveillance of securities transactions, was established as an external organ of the Prime Minister's Office in June 1998. With the establishment of the Financial Reconstruction Commission (FRC) in December of the same year, the Financial Supervisory Agency became an organization under the jurisdiction of the FRC.

The Financial Supervisory Agency was reorganized into the Financial Services Agency (FSA) under the FRC in July 2000. Following this reorganization, the FSA had the responsibility for planning and policymaking of the financial system, which had been under the jurisdiction of the Ministry of Finance.

The FSA became an external organ of the Cabinet Office in January 2001 through the reorganization of the central government ministries and agencies. After the FRC was abolished, the FSA took over the responsibility of the FRC including management of failed financial institutions.