The 225-issue Nikkei Stock Average finished 497.43 points, or 1.82 percent, higher from Friday at 27,781.02.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange ended 38.97 points, or 2.05 percent, higher at 1,940.05.
Trading volume on the main section reduced to 1,062.52 million shares from Friday's 1,236.71 million shares.
Briefly climbing more than 2 percent in the afternoon, the Nikkei logged its largest increase since June 22. As record highs of COVID-19 infections deepened concerns over economic recovery, the benchmark fell to its lowest level in six months late last week.
"Sentiment was also pushed up after a historically large number of firms reported upward revisions for earnings forecasts for the remaining business year," said Shingo Ide, chief equity strategist at the NLI Research Institute, adding that rises in other Asian markets further supported the rebound of Tokyo market.
He also said that Investors are paying close attention to the upcoming earnings results from major firms such as Toyota Motor and Nintendo later in the week because they may significantly influence market sentiment.
With the exception of the air transportation industry, every sector gained in general. Major rising sectors included marine transportation, and iron and steel. Gainers outnumbered declining ones 1,848 to 301 on the First Section, while 41 finished unchanged.
Chip-related stocks benefited from gains late last week in their U.S. counterparts. Among them, Sumco rose 1.7 percent, Screen Holdings jumped 2.9 percent, and Tokyo Electron surged 3.6 percent.
NEC finished 4.0 percent higher after the electronics firm said Friday that it resumed profitability in the April to June quarter, which exceeded market expectations.
Bucking the upward trend, Mazda Motor dropped 5.7 percent. Despite the improved April-June performance, the automaker on Friday maintained its earnings forecast for the business year through March 2022 because of uncertainties about production costs and chip shortages.