The consortium, led by Mitsubishi Heavy Industries, is developing a jet that has similar technology to US-made F-35 stealth fighters, with a prototype set for a test run in January, the Mainichi Shimbun newspaper said.
About 39.2 billion yen ($384 million) has been invested in the project, said the report, which did not cite sources.
Following the initial flight, the jet will undergo about two years of testing at the Defense Ministry with Tokyo set to decide on whether to buy the plane by early 2019, it added.
The story could not be immediately confirmed.
Japan, which sees a security alliance with the United States as a cornerstone of its foreign policy, has long depended on US manufacturers for military hardware.
But the conservative government has been looking to expand Japan's military influence, and has relaxed a self-imposed ban on weapons exports.
Last month, Tokyo loosened the bonds on Japan's powerful military, proclaiming the right to go into battle in defense of allies, in a highly controversial shift for the officially pacifist country.
The development of a homegrown jet comes amid worsening tensions with Beijing over rival claims to islands in the East China Sea.
Japan said last month that its military scrambled fighter jets a record 340 times in the three months to June in response to feared intrusions on its airspace.
Chinese government ships and planes have been seen off the disputed islands dozens of times since Japan nationalized some of the archipelago nearly two years ago.