Japan will work with the United Nations on a project to reduce the number of small arms held by former militants in the southern Philippines, the nations announced on Tuesday in Manila.
The Mindanao region was a flashpoint for armed skirmishes for decades.
Japan's $5-million contribution will go toward ridding the area of light weapons to ensure peace as it transitions to regional autonomy.
"Recovering these small weapons will eventually lead to improved security," said Koshikawa Kazuhiko, Japan's ambassador to the Philippines.
"Japan is the first country to contribute to this field. It is an honor and a heavy responsibility."
The UN Development Program will lead the technical implementation of the project, which it sees as critical to the peace process.
Islamic militants in Mindanao, fighting for independence from the largely Catholic nation, had clashed with government forces since the 1970s.
In 2014, the largest Muslim militant group, the Moro Islamic Liberation Front, signed an agreement with the government to end the fighting and work toward autonomy. Japan helped mediate the peace talks.
The Bangsamoro Autonomous Region in Muslim Mindanao is set to hold its first election in 2025.
But officials say the thousands of weapons still held by former fighters threaten regional security.