The move represents the government's first formal departure from nuclear power since the Fukushima nuclear power plant disaster in March 2011.
"Based on facing the reality of this grave accident and by learning lessons from the accident, the government has decided to review the national energy strategy from scratch," states a government policy document released Friday.
"One of the key pillars of the new strategy is to achieve a society that does not depend on nuclear energy as soon as possible."
Prior to the Fukushima crisis, nuclear power provided 30 percent of Japan's electricity, making it the world's third-biggest nuclear generator. The government had aimed to increase that percentage to 50 by 2030.
A report last month by a government panel of experts analyzing recent polls indicates the majority of the Japanese respondents favor zero nuclear power.
"Every policy resource will be brought to bear to make it possible to have zero nuclear power plants in operation by the 2030s," states the document.
"The fact that one of the major nuclear countries is pulling out will not help the industry at all internationally -- people will ask why," Daniel Grosvenor, head of Deloitte's nuclear section in Britain was quoted as saying by the Financial Times.
"Many countries took a pause after Fukushima and they might do so again."
Environmentalists welcomed the decision but said it is long overdue.
Greenpeace Japan nuclear campaigner Kazue Suzuki told The Globe and Mail newspaper that the nuclear phase-out comes nearly two decades later than needed but the new strategy makes it clear "that renewable power, not nuclear, is the future."
The government's strategy calls for renewable energy to account for about 30 percent of Japan's future energy. That's an eightfold increase from 2010 levels.
Critics argue that the move is a last-ditch effort by the Democratic Party of Japan-led government to garner favor ahead of the general election in November.
"This announcement must become law," Suzuki said, "otherwise it will be seen as nothing but lip service to buy votes before the coming election."
Currently, only two reactors at the Oi nuclear power plant in Fukui prefecture are in operation.
The document says the government will temporarily reactivate the country's 50 remaining reactors halted after the Fukushima disaster if the new nuclear regulatory group, scheduled to debut Wednesday, deems them safe, The Japan Times reports.
But the reactors -- some built in the early 1970s -- must be shut once they reach an operating lifetime of 40 years, the plan says, and no new reactors are to be built.
Under the new plan, the government will continue its program of recycling uranium and plutonium fuels.