The emergency measures — less strict than a blanket lockdown — will be in force until August 22, several Japanese media outlets reported, following a rise in cases less than three weeks before the Games begin.
“The government decided to declare the fourth state of emergency for Tokyo and communicated the decision to the ruling parties,” public broadcaster NHK said.
Kyodo News, citing a senior government official, said it was now likely the Olympics would be held behind closed doors.
The pandemic-postponed 2020 Games will take place under strict anti-infection rules, with overseas fans already banned.
Organisers set a limit last month of 10,000 fans, or half of each venue’s capacity, but recently warned that a fully closed-door Games remained an option as the virus situation worsens.
Japan’s Covid-19 outbreak has not been as severe as in some countries, with around 14,800 deaths, but experts say another wave could stretch medical services as the Games begin.
Participants have already begun arriving in Japan, with 11,000 Olympic athletes from around 200 countries set to take part.