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During the Allied Occupation of Japan (1945–1952) following World War II the Allies created mechanisms to allow countries victimized by Japanese military operations to claim both reparations for economic and industrial losses and restitution of property looted by Japanese forces during the war. Agreement was easily reached on a policy of returning identified looted material, including cultural objects, to source countries. But controversy erupted over whether or not art and other cultural objects should be included as part of the general reparations program. Cultural heritage was eventually excluded from reparations, but some countries (most notably China) and policy makers continued to advocate the replacement, or restitution-in-kind, of cultural material lost or destroyed during the war as a result of Japanese military operations by equivalent cultural objects from Japanese public and private collections. Eventually Gen. Douglas MacArthur, the Supreme Commander for Allied Forces in Japan, forcefully intervened by repudiating the notion of removing Japanese cultural objects as contrary to the international precedent and potentially detrimental to the overall success of the Occupation. This paper traces the historical controversy of restitution-in-kind in the case of postwar Japan and highlights some of the consequences of the decisions made at that time.