A drinking ban has been imposed to control soldiers after a series of incidents took place where US soldiers misbehaved with locals.
The US Navy slapped a drinking ban on sailors stationed in Japan on Monday after a drunk sailor crashed a car into another and injured two people on the southern island of Okinawa.
Naval authorities have also restricted the movement of sailors as a punishment.
The latest incident came as the US military was observing a 30-day mourning period at bases on Okinawa after an ex-marine there was arrested on suspicion of killing a 20-year-old Japanese woman.
"For decades we have enjoyed a strong relationship with the people of Japan. It is imperative that each sailor understand how our actions affect that relationship and the US-Japan alliance as a whole," Rear Admiral Matthew Carter, commander of US naval forces in Japan said in a statement.
All US Navy sailors in Japan will be kept on base and banned from drinking until "all personnel understand the impact of responsible behaviour on the US-Japan alliance," the statement said. "Sailors living off base will be allowed to travel to and from base and conduct only "essential activities." The punishment applies to all the 18,600 US sailors stationed in Japan.
The murder of the girl had marred US President Barrack Obama's historic visit to Hiroshima as a wave of anger had swept Japan over the continuing presence of the US military and the bad behaviour of soldiers.
Renewed anger among residents in Okinawa also threatens a plan to relocate the US Marines' Futenma air base to a less populous part of Okinawa.
The plan was agreed on in 1995 after three American servicemen raped a 12-year-old Japanese schoolgirl, causing widespread outrage.
Okinawa's governor and many residents want the marines off the island.
Okinawa alone hosts more than half of the 50,000 American troops based in Japan. Locals have long been upset about Americans from the base committing crimes on the island.
Earlier this year, another US serviceman stationed in Okinawa was arrested on suspicion of raping a woman.
Protestors in Japan have already come out onto the streets in response to the incident and the US's policy concerning the base is facing intense criticism on social media, including from Americans.
Japan's prime minister expressed "strong indignation" over the crime.
"I have no words to express, considering how the family feels," Prime Minister Shinzo Abe had said. "We urge the US side to take thorough measures to prevent the recurrence of such events."