The move reduces US military land on the island by 17 percent making it the largest land return since 1972.
The United States has formally returned nearly 10,000 acres (4,046 hectares) of land on Okinawa island to the Japanese government, making the largest land transfer since 1972.
"It will reduce the amount of US-administered land on Okinawa by 17 percent," Lieutenant General Jerry P. Martinez, US Forces Japan Commander, said in a statement.
But the area being handed back is in a sparsely populated region, while other facilities, including air bases, are located farther south in or near crowded residential areas of the small island with a population exceeding one million people.
Crimes and accidents by military personnel, civilian employees and dependents on Okinawa, combined with noise and inconvenience from military flights and training, have frustrated residents.
The land return was marked with a ceremony held by the government in Okinawa but was boycotted by the governor of Okinawa, Takeshi Onaga in protest against the US military.
Mayu Yoshida reports from Tokyo.