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Background: Despite being a signatory since 2004, Japan has not yet fully implemented Article 8 of the World Health Organization's Framework Convention on Tobacco Control regarding 100% protection against exposure to second-hand smoke (SHS). The Japanese government still recognizes designated smoking rooms (DSRs) in public space as a valid control measure. Furthermore, subnational initiatives for tobacco control in Japan are of limited effectiveness. Through an analysis of the Hyogo initiative in 2012, we identified key barriers to the achievement of a smoke-free environment. Methods: Using a descriptive case-study approach, we analyzed the smoke-free policy development process. The information was obtained from meeting minutes and other gray literature, such as public records, well as key informant interviews. Results: Hyogo Prefecture established a committee to propose measures against SHS, and most committee members agreed with establishing completely smoke-free environments. However, the hospitality sector representatives opposed regulation, and tobacco companies were allowed to make a presentation to the committee. Further, political power shifted against completely smoke-free environments in the context of upcoming local elections, which was an obvious barrier to effective regulation. Throughout the approving process, advocacy by civil society for stronger regulation was weak. Eventually, the ordinance approved by the Prefectural Assembly was even weaker than the committee proposal and included wide exemptions. Conclusions: The analysis of Hyogo's SHS control initiative shed light on three factors that present challenges to implementing tobacco control regulations in Japan, from which other countries can also draw lessons: incomplete national legislation, the weakness of advocacy by the civil society, and the interference of the tobacco industry. © 2015 Keiko Yamada et al.