This paper discusses the meaning of the internationalization of higher education in Japan, based on a review of global trends in this area. Globalization has brought major changes to higher education, and in order to deal with them, the Japanese government has promoted internationalization as an important policy for higher education reform with a series of competitive funding programs. Universities in Japan, too, have made efforts to internationalize themselves. Despite the government's policy initiatives, the internationalization of Japanese higher education has not been understood as a high-priority issue at the institutional level, with many examples of superficial or partial add-ons of the international aspect, and has even been criticized as unable to contribute to transformative change at universities. Internationalization tends to be used as a means to prevail in the domestic competition between universities (inward-facing internationalization) and does not necessarily result in initiatives which lead to the improvement of learning in a globalized environment. All in all, the government's competitive funding projects for internationalization have indeed intensified domestic competition among universities. However, it is not certain that the funds have increased the international competitiveness and compatibility of Japanese higher education as a whole.