If you are a foreigner living in Japan, you are expected to obtain a Japanese driver's license. A license from your home country, even with an International Driving Permit simply isn't good enough for more than a few months and driving without a local license when one is required is a very serious offence in Japan. If you are involved in an accident and you cannot produce a Japanese license, you're in big trouble. Even if you're not in an accident but are stopped by the police, you will be subject to a fine at the very least, arrest, or even deportation.
In order to prevent foreigners using an International Driving Permit continually, you are required to have obtained your IDP at least three months prior to entering Japan... so, as a resident, your only option is to get a local license.
Citizens of some countries are lucky in that it is a very simple process for them to convert their home license to a Japanese license with a translation of the original, as the Japanese authorities consider those countries to have a traffic safety record equal to that of Japan. These countries are...
UK, Germany, Iceland, Ireland, Italy, Holland, Greece, Sweden, Spain, Norway, Denmark, Finland, France, Portugal, Belgium, Luxembourg, Australia and New Zealand.
Nationals of these countries should just head on down to their local Driver's License Centre with the following...
Original license from the country of issue. Note that you MUST have lived in the country of issue for at least three months after it was issued
Translation of the aforementioned from the Japanese Automobile Federation
Resident card/Alien registration card
Completed application form
Photographs, which can be taken on the spot at the Driver's License Centre
The fee, which will be around 5000 Yen
The license should be issued within the hour.
All other nationals must take the written and driving test in addition to the above and the process is as follows...
You will be asked 10 questions about road rules and road signs. You must answer at least 7 correctly to pass. Once you have passed the written test, apply for the driving exam, which will be held around a week later. It will be held at the same place. If you fail, you can repeat as many times as required in order to pass but you will have to pay the fee again for each attempt. If you pass, the license will be issued on the same day, within the hour.