The decision announced Tuesday by Yahoo Japan will see it adopt Google’s search-engine and search ad delivery system.
The deal is a major coup for Google given Japan is the world's third-largest search market.
According to the WSJ, its search-engine technology will handle more than 90% of Japan's internet queries in the wake of its adoption by Yahoo Japan.
The loser from the deal is Microsoft.
Yahoo, which owns Yahoo Japan alongside Softbank, struck a deal last year to drop its own search service and replace it with Microsoft’s Bing search engine in order to cut costs.
That deal however did not include an agreement that Yahoo Japan adopt Bing, thus allowing Yahoo Japan to stitch up a deal with Google.
"We looked at this from many angles, but in the end we determined that Google was the better choice," said Yahoo Japan Chief Executive Masahiro Inoue.