Japan released the Act on Strengthening Industrial Competitiveness on January 20, 2014, which provided mechanisms for innovative technologies and services for all industries. Based on three years’ domestic practical experiences and global innovation trends, Japan officially launched the Japan version of the project-based regulatory sandbox on June 6, 2018. While the regulatory sandbox scope of UK, Singapore and Taiwan are all defined only for financial innovation, Japan project-based regulation sandbox scheme is applicable to all industries, this is, all enterprises and innovation business activities can be widely applied under the legislation. How to encourage digital economy and strengthen industrial competitiveness under a regulatory reform and adjustment scheme in response to the fourth industrial revolution have become a big challenge. By exploring the contents and mechanisms of Japan’s Project-based Regulatory Sandbox System, this study elaborates that a sandbox scheme which can be widely adoptable in every industry might be a better solution when facing a technology-based innovation.