It is obvious that capital investment in agriculture plays an important role in the development of agricultural production. This study is intended to present on econometric analysis of capital investment in Japanese agriculture. The main objective of this analysis is to provide an effective way of forecasting capital investment in agriculture. The econometric model has been built up from a simultaneous equation system, and farm-income is considered as a core-variable in the model. The two-stage least squares method is also applied for the estimation of each equation in the model. This study does not involve any analysis relating to the investment behavior of the micro farm-household, but inteds to analyze capital investment behavior in agriculture at the macro level. Capital investment in agricultre is taken to include mainly investment in land improvement wich regard to land utilization for agricultural production, as well as replacement and purchase of farm machinery, equipment and farm buildings. Furthermore, it also includes new planting and growth of perennial crops, and increase and appreciation of livestock. The results of this study can be summarized as follows: The results obtained from this econometric model indicates that the income elasticity of capital investment in agriculture has different values: 0.65 in land improvement, 0.69 in farm buildings, 1.67 in farm machinery, 0.60 in plants and 0.52 in livestock investment. The investment of the farm-household. A 1.0% increase in the government's investment in land improvement brings about an increase of 0.60% in land improvement, 0.65% in farm buildings, 0.22% in farm machinery, 0.29 in plants and 0.28% in livestock investment by the farm-household. The stability of this econometric model can be tested by the use of multiplier analysis. the value of the multiplier converges towards stability, demonstrating the stability of the model. The value of the exogenous variable is estimated independently, and by using the reduced form, the volume of investment is forecasted until fiscal 1981. The results show that the volulme of investment by the farm-household in land improvement and farm machinery is increasing steadily, while stagnation or decline can be observed in investment in farm buildings, plants and livestock.