As of April 1 of 2004, Japanese national universities became National University Corporations (NUCs hereafter). While the reform was implemented in a wave of initiatives for restructuring government activities, it reflected to an extent the current global trend toward marketization of higher education. Examination of this reform will not only help understand the current reforms in Japan, but also illuminate some of the fundamental issues that the higher education systems in the world are facing. In this article, I shall outline the historical and political backdrops of the reform (Sect. 1), outline the basic construct of the NUC (Sect. 2), examine the process of implementation and the issues revealed in the process (Sect. 3), and discuss basic problems involved in this scheme.