This article, arising from a study located in a Japanese education setting, analyses the socio-emotional challenges experienced by host (Japanese) and international (Australian) students as they interact in the same international education environment over a period of time. Students' multiple interpretations of critical incidents created by the researchers on the basis of recurrent challenges highlight that intercultural relational development is an interactive, dynamic process that requires sensitivity and reciprocal understanding. The Japanese location of the study contributes to redressing the dominance of studies conducted in English-speaking host environments. (Contains 2 tables.)