It uninhabited Senkaku Islands, owned by a Japanese family, have been disputed by Japan, China and Taiwan, all of which claim sovereignty, CNN reported.
Japan's plan to buy the islands was initiated in April by Tokyo Gov. Shintaro Ishihara.
Japanese media reported Friday Japanese authorities have agreed to pay $26.1 million for the islands.
Speaking with CNN, Japanese Prime Minister Yoshihiko Noda declined to say how much his country has agreed to pay for the islands but said the deal is in its "final stages."
"The Senkaku Islands are an inherent part of Japanese territory, historically as well as under international law, so there's no territorial claim issue between the two countries," he said. "Right now, it is the ownership issue -- whether the individual owns these islands, or the Tokyo metropolitan government or the state. And I think we have to clearly and solidly explain these stances to the Chinese side."
Chinese officials didn't comment Friday but issued a statement Wednesday objecting to Japan's acquisition of the islands, which are called the Diaoyu Islands in China.
"I want to emphasize again that any unilateral actions taken by the Japanese regarding the Diaoyu Islands are illegal and invalid," said Hong Lei, a Chinese Foreign Ministry spokesman. "We are closely monitoring the developments and will take necessary measures to defend our territorial sovereignty."
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