The revised law will take effect on October 1 and offenders will not be indicted unless rights-holders file complaints.
On the flip side, unauthorised uploaders of content in Japan can currently be hit with up to ten years imprisonment and up to 10 million yen (approx £79.8 million).
Data from the Recording Industry Association of Japan (RIAJ) showed nearly 440 million legal music downloads in Japan against nearly ten times the amount of legal downloads.
While the music industry has welcomed the revised law, many internet users have called the penalties too harsh, claiming that it can be difficult to know when content is legally available for download.
RIAJ chairman Naoki Kitagawa welcomed the changes, saying that the association will carry out more campaigns to help internet users understand the law. He added that he hopes he amended law will reduce copyright violations and help create "a sound internet society."