The 225-issue Nikkei Stock Average added 105.04 points, or 0.40 percent, from Wednesday to close the day at 26,431.20.
The broader Topix index, meanwhile, gained 11.88 points, or 0.64 percent, to finish at 1,867.81.
Local brokers said that despite the Fed on Wednesday deciding to make its largest interest rate hike since 1994 with a 0.75 percentage point increase to combat inflation, the increase was in-line with market expectations.
They added that the rate hike was largely factored in following May's consumer price interest showing that inflation in the world's largest economy was showing no signs of slowing.
Investors, strategists here said, also took heart in Fed Chairman Jerome Powell telling a press briefing that the 0.75-point increase is an uncommonly large hike and he doesn't see similar sized hikes by the Fed as being common.
He did note, however, that the central bank's aggressive monetary policy could take a toll on the country's employment situation.
"Investors bought back stocks in the morning on relief that the policy meeting ended without major surprises," Toshikazu Horiuchi, an equity strategist at IwaiCosmo Securities Co., was quoted as saying.
But despite Thursday's gains here, local analysts remained circumspect about U.S. economic growth looking ahead and said that continued volatility in the market was to be expected.
"The uncertainty surrounding U.S. monetary policy and the economic outlook have not gone away, and market volatility is likely to remain, so in that environment you can't just jump back in and buy stocks," Koji Toda, a fund manager at Resona Asset Management, was quoted as saying.
"It doesn't feel like there are new longs," Toda said.
Following the market's initial rise, the Nikkei's upside was capped by heavily-weighted technology shares losing ground, brokers here said.
By the close of play, farm and fishery, textile and apparel, and transportation equipment issues comprised those that gained the most, with rising issues outpacing falling ones by 1,216 to 561 on the Prime Market, while 61 ended the day unchanged.
Some Nikkei heavyweights helped elevate the broader market, with Fast Retailing, the operator of the Uniqlo clothing chain, gaining 1.4 percent, while Toyota Motor accelerated 2.9 percent.
Sony Group, for its part, ended the day 1.5 percent higher.
Transportation and travel-related issues found favor following Japan's easing of border controls to allow more foreign tourists back into the country, with Keisei Electric Railway increasing 2.2 percent on hopes for increased patronage.
Similarly, travel agency H.I.S. added 2.6 percent, while online agency Airtrip climbed 4.0 percent by the close.
On the Prime Market on Thursday, 1,130.69 million shares changed hands, dropping from Wednesday's volume of 1,226.53 million shares.
The turnover on the penultimate trading day of the week came to 2,641.63 billion yen (19.65 billion U.S. dollars).
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