This sophisticated information system enables an Aegis destroyer to target a missile and fire an interceptor based on radar information provided by another Aegis vessel closer to the missile launch site.
Japan is now protected by four destroyers equipped with U.S. Aegis missile defence systems carrying SM-3 intercept missiles as well as surface-to-air modernised Patriot Advanced Capability-3 (PAC-3) ballistic missile interceptors.
"The proposed sale will provide Japan with an increased ballistic missile defense capability to assist in defending the Japanese homeland and USA personnel stationed there", the agency states.
Throughout 2017, North Korea has conducted a series of ballistic missile tests despite constant criticism from the West and trade sanctions. This would boost the number of interceptors available to counter a volley of missiles launched by North Korea.
News of the sale comes as North and South Korea hold their first talks in more than two years aimed at solving the crisis over the North's nuclear missile program.
US Defense Department's Missile Defense Agency director Lieutenant General Sam Greaves accompanied Onodera to explain about the system.
Within one month after Trump's Tokyo sojourn, Japan formally chose to expand its ballistic missile system using US-made ground-based Aegis radar stations and interceptors in December.
In late December, Japan's Cabinet approved its budget plan for fiscal 2018, with a record-high defense spending.
Following an inspection of a Hawaiian test complex, Defense Minister Itsunori Onodera said Wednesday that Japan hopes to bolster the capability of the Aegis Ashore missile defense system that it plans to introduce in fiscal 2023. Russian Foreign Ministry spokesperson Maria Zakharova warning that the deal could undermine bilateral relations "including negotiations on a peace treaty" that has not been concluded between Russia and Japan since WWII.
The new information exchange system, developed by the US, will allow using radar data from a destroyer equipped with Aegis system in order to intercept missiles by another destroyer, Japanese newspaper Yomiuri Shimbun said.
Washington, however, brushed off Moscow's criticism, saying that it in "full compliance" with the agreement while, in turn, accusing Russian Federation of breaching it.