The coast guard said the fishing boat was escorted by four Taiwan coast guard vessels but was turned back Thursday before it could enter Japanese territorial waters, Kyodo News said.
The islands in the East China Sea are under Japanese control but are also claimed by China and Taiwan. The islands, which are about 120 miles northeast of Taiwan, are called Diaoyutai Islands by Taiwanese.
Tensions between China and Japan have risen sharply since Japan nationalized the islands last September. The islands are uninhabited but are reported to be rich in natural resources.
In the case of Taiwan, Japan is planning bilateral talks on fishing by Taiwanese boats in the islands' waters but Kyodo quoted Japanese diplomatic officials that the latest incident might negatively affect that effort.
Those aboard the fishing boat included four activists, a television cameraman from Hong Kong's Phoenix TV and an Indonesian worker, Kyodo said.
The Taipei Times carried a photograph of a Japanese coast guard patrol ship spraying water on the fishing boat.
Taiwanese Foreign Affairs Ministry official Su Chii-cherng said the activists' mission was voluntary and in no way should affect the official Taiwan-Japan fishery talks, the Times said.
The official also was quoted as saying the islands are part of Taiwanese territory and have been traditional Taiwanese fishing grounds.