The study scrutinizes the rationale behind higher education policy change in England and Japan, giving attention to stakeholders' perspective and legitimacy, policy network, and policy sphere. It argues that change in higher education policy in England and Japan towards being more market-oriented in the 1980s (England) and the 1990s (Japan) can be commonly explained by the government's application of neo-liberal policy. The details in the political rationale for such policy change differ between the two. In England, change in the Government's values and perspective caused the policy change, while in Japan, enlargement of the policy sphere by incorporating non-education sub-government in the policy-making structure and the conflict and compromise between neo-liberal and anti-neoliberal groups resulted in the Government's policy change. The methods of data collection applied in the study were documentation and semi-structured interviews with selected stakeholders involved in the two higher education systems. The study suggests that not only change in the main stakeholders' values but also that in the policy network is significant in policy change. (Contains 11 tables and 4 notes.)