There are doubts, however, over how well the new policy will work.
"Negative interest rates are one of the last instruments in the BoJ's tool box," Martin Schulz of the Fujitsu Institute in Tokyo told the BBC. "But their impact is unlikely to be strong."
Mr Schulz cautioned that in the eurozone, negative interest rates are being used to tackle a financial crisis, whereas Japan is in a protracted slow growth environment.
"In Japan, credit didn't expand not because banks were unwilling to lend but because businesses didn't see the investment perspective to borrow. Even with negative interest rates, this situation will not change."
"Businesses don't need money - they need investment opportunities. And that can only be achieved by structural reforms, not by monetary policy," he said.
The decision comes in addition to the BoJ's massive asset-buying programme, which over the past years has failed to boost growth.
Bill Blain, of Mint Partners, said monetary authorities' moves to ever-cheaper money since the financial crisis that began in 2008 have distorted global markets - and investors were uneasy: "Investors are worried that the only place we've seen any inflation has been in financial assets, things like stocks, property and bonds. And as a result everyone is suddenly worried they are sitting on nightmares."