FOR IMMEDIATE RELEASE

Tokyo, September 15, 2006 --- Japan Tobacco Inc. (JT) (TSE: 2914) announced today that it would voluntarily set up a Compensation Advisory Panel as a consultative body to the board of directors. The panel will be established on October 1, 2006, in an effort to enhance the organization's corporate governance.

JT has been in the process of enhancing its corporate governance, and has introduced the "Executive Officer System" and "Advisory Committee." In addition to these initiatives, JT will introduce the Compensation Advisory Panel to ensure objectivity and increase transparency of the process to decide compensation provided to directors and executive officers of the company. The panel will consist of JT's Chairman of the Board, who will be leading the panel, the President, the director of human resources, and appointed external members. Based on proposals that are made by the board of directors, the panel will deliberate and release its findings for the company's compensation policies for directors and executive officers. Two external appointees have been selected and are listed below.

Alphabetical order

Norio Ichino, Director and Vice Chairman, Tokyo Gas Co., Ltd.
Morio Ikeda, Senior Advisor, Shiseido Company, Ltd.

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Japan Tobacco Inc. is the world's third largest international manufacturer of tobacco products. The company manufactures internationally recognized cigarette brands including Camel, Winston, Mild Seven and Salem. Since its privatization in 1985, JT has actively diversified its operations into pharmaceuticals and foods. The company's net sales were JPY 4.637 trillion in the fiscal year ended March 31, 2006.