Parliament will be dissolved on Friday, the 64-year-old conservative politician said in an announcement on Monday that had been widely anticipated.
Takaichi has been riding high in opinion polls and is looking to increase the wafer-thin majority held by her Liberal Democratic Party and its partner, the neo-liberal Ishin (Japan Innovation Party), in the National Diet.
The Tokyo Stock Exchange has reached record highs in expectation of the elections, as a larger governing majority will allow Takaichi's coalition to implement growth plans based on increased state expenditure.
Takaichi, who was elected Japan's first female prime minister at the end of October, has said that political stability is necessary for reform. Her decision to call early elections is not without risk, and it remains to be seen whether her personal popularity will rub off on the LDP.
The party, which has been in government almost continuously since 1955, recently lost its majorities in both houses of the Diet.
The largest opposition party, the Constitutional Democratic Party of Japan, led by former prime minister Yoshihiko Noda, and Komeito have announced they will join forces in a new centrist reform party that sees itself as a liberal alternative to Takaichi's conservative coalition.
Komeito served as coalition party to the LDP for 26 years but withdrew its support in October in response to Takaichi's hard line on party financing and security policy. The LDP had previously benefited from electoral agreements with Komeito.
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