At the end of September 2012, the latest period for which numbers were available, Japan's total population was estimated at 125.95 million, the ministry said.
The estimates said the number of newborn babies in 2012 fell to a record low of 1,033,000, down by 18,000 from 2011, a ministry survey said, Kyodo News reported.
Based on those numbers, the natural population decline obtained by deducting deaths from births was estimated at 212,000 in 2012, up from the previous year, which marked the first year when the decline exceeded 200,000 in a country of aging population. Total number of deaths in 2012 is expected to total 1.245 million.
A ministry official said the pace of decline will only increase as the number of the younger generation decreases.
Kyodo reported that the National Institute of Population and Social Security Research has predicted Japan's total population would drop to 86.74 million in 2060.
The country's population has been shrinking since 2007. In 2011, when east Japan was struck by the deadly earthquake and tsunami, the country's number of deaths totaled 1,253,066.
The ministry said the four leading causes of death in Japan were cancer, heart disease, pneumonia and cerebrovascular disease, which together accounted for 60 percent of the overall death rate, Kyodo reported.
Japan's fertility rate or the average number of children a woman will have over her lifetime in 2012 was 1.39, unchanged from the previous year.