On September 30, 1999 a severe accident happened at a nuclear fuel factory run by JCO, a subsidiary of Sumitomo Metals and Mining in the village of Tokaimura, 130 km northeast of Tokyo. Three workers were exposed to high levels of radiation. Hisashi Ouchi, 35, died on December 21, 1999. His colleague Masato Shinohara, 40, survived until April 27.

The Tokaimura accident is the third most serious accident in the history of nuclear power, after the 1986 Chernobyl accident and the 1979 Three Miles Island accident. Unlike these other cases, the Tokaimura accident did not involve a nuclear power station but a nuclear fuel factory where no nuclear chain reaction should ever happen, yet due to gross negligence it did. Since there was no mechanical system to interrupt the reaction it was sustained for 17-20 hours. For several days the ventilation system in the factory was left running, blowing contaminated air from the inside of the building into the surrounding village.

The accident happened when workers preparing nuclear fuels mixed uranium oxide with nitric acid using a stainless steel container instead of a mixing apparatus. This shortcut was described in an illegal operating manual drafted by the company. The manual had never been approved by the supervising ministry, as was legally required. The procedure violated some of the most basic safety requirements that were well known in the nuclear industries since the early 1940s. By circumventing the mixing apparatus an excessive amount of nuclear fuel could be inserted at any one time, which lead to a nuclear chain reaction. Most likely the illegal shortcut was an attempt to save costs in order to be more competitive with foreign fuel suppliers. The shortcut had been used for seven or eight years before the accident happened. The three workers were performing this task for the first time and were wearing t-shirts instead of protective clothing and the required film badges to measure radioactive exposure.

The company did not have any emergency plans in place for handling such criticality accidents. A foreign specialist said the plant "had the safety standards of a bakery and not a nuclear facility." The Science and Technology Agency later revoked the operating license of the plant owner. Critics pointed out nuclear facilities such as this fuel factory are rarely ever checked once they receive the initial operating license.

Families living near the plant were temporarily evacuated and 300,000 people were asked to stay indoors for more than a day. Later neighbours and employees were tested for radioactive contamination. 63 people were identified as having been exposed, amongst them 14 workers of JCO (who poured boron into the reaction vessel to help put out the nuclear chain reaction) and the two victims who later died.

The Tokaimura accident was the third serious nuclear accident in four years. In 1996 a coolant leak and subsequent fire caused an emergency shutdown of the plutonium-fuelled reactor Monju. The following year a fire and explosion in a nuclear waste processing facility in Tokaimura exposed 35 people to radiation.