Japanese Army atop the Xiaoximen (Small Western Gate) of the inner city walls of Mukden (now Shenyang), Manchuria, China From "Manshu Jihen Shashincho"

Late in the evening of 18 September 1931 (Showa 6), a short stretch of railroad track belonging to the South Manchurian Railway Company near Liutiao Lake in the outskirts of Mukden (now Shenyang) was blown up by officers of the Kwangtung Army (part of the Imperial Army stationed in Manchuria). This was the so-called Manchurian Incident or Mukden Incident.

In his Diary, HARADA Kumao, private secretary to the Genro SAIONJI Kinmochi, left a scrupulous account of Prime Minister WAKATSUKI Reijiro's agitation upon learning of the Manchurian Incident, as well as the subsequent actions of the Cabinet and the Imperial Court. The Cabinet immediately laid down a nonexpansion policy, but the Kwangtung Army continued carrying out its expansion into Manchuria.

The idea was suggested of creating a "cabinet of cooperation" composed of both the Minseito and the opposition Seiyukai as a way to reach a breakthrough in the situation, but with various people working at cross-purposes, the idea backfired instead, bringing about political turmoil. As a result, the second WAKATSUKI Cabinet fell, frustrating Foreign Minister SHIDEHARA Kijuro's efforts at diplomatic conciliation. The following year, Japan recognized the "Manchukuo" puppet regime installed by the Kwangtung Army, one of the few countries to do so. In 1933 (Showa 8), Japan withdrew from the League of Nations, and found itself increasingly isolated in the international community.