Japan's Emperor Akihito on Tuesday delivered his traditional New Year address with tens of thousands of well-wishers flocking to the Imperial Palace for one of the last such occasions before he abdicates next year.

It was the final New Year appearance alongside Akihito for Princess Mako, his eldest granddaughter, who is scheduled to wed her college sweetheart in November and leave the royal family.

The Imperial Palace said more than 73,000 people attended his address, many waving small Japanese flags and shouting "Banzai" or "Long live".

"Happy New Year. I'm sincerely glad to celebrate the new year together with you," the emperor said in a televised address from a glass-covered balcony at the palace, where he was flanked by Mako and other family members.

They will make two further appearances before the crowd in the afternoon.

The emperor shocked the country in 2016 when he signalled his desire to take a back seat after nearly three decades in the job, citing his age and health problems.

He will be the first emperor to retire -- on April 30, 2019 -- in more than two centuries in the world's oldest imperial family.

Akihito's eldest son, 57-year-old Crown Prince Naruhito, is set to ascend the Chrysanthemum Throne a day later.

The status of the emperor is sensitive in Japan given its 20th century history of war waged in the name of Akihito's father Hirohito, who died in 1989.

Akihito has keenly embraced the more modern role as a symbol of the state -- imposed after World War II ended. Previous emperors including his father, Hirohito, had been treated as semi-divine.

The palace, surrounded by stone walls and mossy moats -- is opened to the general public twice a year -- on the emperor's birthday and the second day of New Year -- for the royal family to greet well-wishers.