Prime Minister Shinzo Abe unveiled the aid during talks at his office in Tokyo with Myanmar's President Thein Sein, who came to Japan to attend the regional summit between Japan and the Association of Southeast Asian Nations.
The yen loans are designed to help build infrastructure for the Thilawa Special Economic Zone in the suburbs of Yangon, Myanmar's largest city, and upgrade a railway network in Myanmar, among other projects.
"We will continue to provide support, both at the public and private level, for infrastructure building initiatives and work toward Myanmar's development," Mr Abe said at a joint press conference with Thein Sein.
With Mr Abe having promised aid of 91 billion yen in loans during his visit to Myanmar in May, the total aid of Japan under his government launched in December last year is now more than 150 billion yen.
Japan and Myanmar also signed a bilateral investment treaty to make it easier to invest in the Southeast Asian economy.
With the agreement, Japan has concluded investment pacts with all 10 members of Asean which groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Welcoming his country's accord with Japan, Thein Sein said he hopes that "there will be more opportunities for Japanese investment into Myanmar."
Among other forms of assistance, Mr Abe pledged Japan's support for Myanmar's health and medical sectors, and postal system.
On the political front, Mr Abe reiterated Japan's full support for Myanmar's efforts for democratic reform.
Myanmar has begun opening up to the world after years of military rule after making a transition to democratic governance in March 2011. As part of its nation-building efforts, Myanmar will hold parliamentary elections in 2015.
Mr Abe told Thein Sein during their meeting that he wants to "cooperate closely" with the president next year to "achieve major progress in developing the Asean region."
Myanmar will hold the Asean chairmanship for the first time in 2014. Japan and Myanmar will mark the 60th anniversary next year of the establishment of diplomatic ties.