The meteoric urban growth that occurred in Japan at the beginning of the early modern period had profound and diverse consequences for Japanese history. Historians have identified seventeen temple towns, all founded in the middle decades of the sixteenth century. In some cases, the daimyo actually converted the temple towns into their own castle headquarters. It has become a historical truism to say that Oda Nobunaga initiated the political and economic programs that resulted in the early modern state; that Toyotomi Hideyoshi amplified them; and that Tokugawa Ieyasu supplied the final institutional refinements. The policies of the shogunate toward currency and the minting of coins also encouraged an expansion in the volume of commercial transactions and contributed to the emergence of castle towns as nodes of economic exchange. The expansion of urban markets was closely linked to the emergence of local towns, such as Johana, where businessmen could produce competitively priced goods.

Japan underwent a major transformation in its social organization and economic capacity during the latter half of the sixteenth century. The three hegemonic leaders, such as Oda Nobunaga, Toyotomi Hideyoshi and Tokugawa Ieyasu, who forged the military unification of Japan during the latter half of the sixteenth century. This chapter focuses on the events of the late sixteenth century, the pivotal transitional years that separated the chūsei from the kinsei epoch. The expansion of the productive capacity of agriculture was the keystone supporting the economic foundations of Japan's early modern society. Commerce and urban centers grew together during the sixteenth century. At this time Kyoto was still Japan's most important political city, as well as a center of a superlative tradition of craft and artisan production. The specific characteristics of the early modern social system were also closely associated with the requirements of the commercial economy.

The unification of Japan in the sixteenth century had given risen to kõgi authority. In the ninth month of 1568, Oda Nobunaga entered Kyoto at the head of some fifty thousand troops drawn from Mino, Owari, and neighboring provinces, thus raising the curtain on a new scene in Japan's history. The kind of institutional structure that Nobunaga envisaged as a replacement for the old Muromachi bakufu is lost to historians, as Nobunaga was killed before he could achieve a national military hegemony, a precondition to more sweeping and permanent institutional change. At the time of Nobunaga's death, Toyotomi Hideyoshi, the general who was to succeed Nobunaga, was engaged at the front in Bitchū Province. The state created by Oda Nobunaga and Hideyoshi was basically a military hegemony imposed on the heads of all warrior bands of daimyo who had staked out their own local territorial claims.