During this period, although the Emperor of Japan was officially the ruler of the state and every lord swore loyalty to him, he was largely a marginalized, ceremonial, and religious figure who delegated power to the shōgun, a noble who was roughly equivalent to a military dictator.

From 1346 to 1358, during the Nanboku-cho period, the Ashikaga shogunate gradually expanded the authority of the Shugo (守護), the local military and police officials established by the Kamakura shogunate, giving the Shugo jurisdiction over land disputes between gokenin (御家人) and allowing the Shugo to receive half of all taxes from the areas they controlled. The Shugo shared their newfound wealth with the local samurai, creating a hierarchical relationship between the Shugo and the samurai, and the first early daimyo (大名, feudal lords), called shugo daimyo (守護大名), appeared.

In 1428, Ashikaga Yoshimochi, the fourth shogun, was ill and the question of his succession arose. Ashikaga Yoshikazu, the 5th shogun, died of illness at the age of 19, so the 6th shogun was chosen from among Yoshimochi's four brothers, and to ensure fairness, a lottery was held. The sixth shogun was Ashikaga Yoshinori. But he was not educated to be a shogun, and his temperamental and despotic behavior caused resentment. Akamatsu Mitsusuke assassinated him during the Kakitsu Rebellion. This led to instability in the Ashikaga shogunate system. The shogunate gradually lost influence and control over the daimyo.

The beginning of the Sengoku Period is considered to be the Kyōtoku incident, Ōnin War, or Meiō incident.

The Kyōtoku Incident was a major war in the Kanto region that lasted from 1454 to 1482. The war began when Ashikaga Shigeuji of Kantō kubō (関東公方), the office of the Ashikaga shogunate in charge of the Kanto region, killed Uesugi Noritada of Kantō kanrei (関東管領), Kantō kubō's assistant. The various forces in the Kanto region divided and fought between the Kubō and Kanrei sides, with the Ashikaga shogunate supporting the Kanrei side.

Ashikaga Yoshimasa, the 8th shogun, tried to strengthen the power of the shogun, but his close associates did not follow his instructions, leading to political chaos and increasing social unrest. Since he had no sons, he tried to install his younger brother Ashikaga Yoshimi as the ninth shogun, but when his wife Hino Tomiko gave birth to Ashikaga Yoshihisa, a conflict arose among the shugo daimyo as to whether Yoshimi or Yoshihisa would be the next shogun. The Hatakeyama and Shiba clans were also divided into two opposing factions over succession within their own clans, and Hosokawa Katsumoto and Yamana Sōzen, who were father-in-law and son-in-law, were politically at odds with each other.

In 1467, these conflicts finally led to the Ōnin War (1467–1477) between the Eastern Army, led by Hosokawa Katsumoto and including Hatakeyama Masanaga, Shiba Yoshitoshi, and Ashikaga Yoshimi, and the Western Army, led by Yamana Sōzen and including Hatakeyama Yoshinari, Shiba Yoshikado, and Ashikaga Yoshihisa.　In 1469, the war spread to the provinces, but in 1473, Hosokawa Katsumoto and Yamana Sōzen, the leaders of both armies, died. In 1477, the war ended when the western lords, including Hatakeyama Yoshinari and Ōuchi Masahiro, withdrew their armies from Kyoto.

The war devastated two-thirds of Kyoto, destroying many aristocratic and samurai residences, Shinto shrines, and Buddhist temples, and undermining the authority of the Ashikaga shoguns, greatly reducing their control over the various regions. The war caused disarray which rippled across Japan. In addition to the military confrontations between separate states, there was also domestic fallout. In contempt of the shogunate, the daimyo who were subjected to remain in Kyoto instead returned to their provinces. Consequentially, some of these daimyo found that their designated retainers or shugodai, representatives of their states appointed in a daimyo's absence, rose in power either to seize control of the domain or proclaim independence as a separate domain.

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The upheaval resulted in the further weakening of central authority, and throughout Japan, regional lords, called daimyōs, rose to fill the vacuum. In the course of this power shift, well-established clans such as the Takeda and the Imagawa, who had ruled under the authority of both the Kamakura and Muromachi bakufu, were able to expand their spheres of influence. There were many, however, whose positions eroded and were eventually usurped by more capable underlings. This phenomenon of social meritocracy, in which capable subordinates rejected the status quo and forcefully overthrew an emancipated aristocracy, became known as gekokujō (下克上), which means "low conquers high".

One of the earliest instances of this was Hōjō Sōun, who rose from relatively humble origins and eventually seized power in Izu Province in 1493. Building on the accomplishments of Sōun, the Hōjō clan remained a major power in the Kantō region until its subjugation by Toyotomi Hideyoshi late in the Sengoku period. Other notable examples include the supplanting of the Hosokawa clan by the Miyoshi, the Toki by the Saitō, and the Shiba clan by the Oda clan, which was in turn replaced by its underling, Toyotomi Hideyoshi, a son of a peasant with no family name.

Well-organized religious groups also gained political power at this time by uniting farmers in resistance and rebellion against the rule of the daimyōs. The monks of the Buddhist True Pure Land sect formed numerous Ikkō-ikki, the most successful of which, in Kaga Province, remained independent for nearly 100 years.