Although designed before World War II, production did not start until 1942 and only about a hundred were produced by the end of the war.
The Type 98 developed in 1938 was a light tank with the same weight as the earlier Type 95, but with thicker armor. The prototype of the new Type 98 tank was completed by Hino Motors in 1939, but it did not enter production at the time. This can be attributed to the adequate performance of the aging Type 95 against obsolete tanks of National Revolutionary Army of the Republic of China forces.
With the start of World War II, the Imperial Japanese Army General Staff quickly realized that the Type 95 design was vulnerable to .50 caliber machine gun fire and attempted to develop a light tank with the same weight as the Type 95, but with thicker armor. A production contract for the Type 98 was awarded to Hino Motors and Mitsubishi Heavy Industries, with a total of 104 Type 98s are known to have been built, 1 in 1941, 24 in 1942 and 79 in 1943. By the end of the war, the Imperial Navy had priority on steel for warships and aircraft construction, leaving the Imperial Japanese Army at the bottom of the list for raw material to build tanks with.
The design of the Type 98, in comparison to the Type 95, featured thicker, welded armor of improved shape, including the use of a Mitsubishi Type 100 6-Cylinder air-cooled diesel engine, rated at 130 horsepower, and located sideways to make maintenance easier. Slightly lighter and shorter than the original Type 95, it could travel at 50 km/h even with its thicker armor. Three pairs of bogies with six road-wheels connected to the chassis using bell cranks, which transferred any movement in the bogies into sideways motion that was absorbed by springs.
In contrast to the one-man turret of Type 95, the Type 98 had a conventional two-man turret, carrying a Type 100 37 mm tank gun, with a muzzle velocity of 760 m/s, and also a coaxial 7.7 mm machine gun.