Work started in the FS-X program, initially given the company designation Mitsubishi SX-3, and began in earnest with a memorandum of understanding between Japan and the United States. It would lead to a new fighter based on the General Dynamics (post 1993, Lockheed Martin) F-16 Fighting Falcon, and in particular the F-16 Agile Falcon proposal. Lockheed Martin was chosen as the major subcontractor to Mitsubishi Heavy Industries, and the two companies co-developed and co-produced the aircraft. The F-2 used the wing design of the F-16 Agile Falcon, but much of the electronics were further updated to 1990s standards.
In October 1987, Japan selected the F-16 as the basis of its new secondary fighter, to replace the aging Mitsubishi F-1 and supplement its main air superiority fighter, the F-15J as well as the F-4EJ. The program involved technology transfer from the USA to Japan and vice versa. Responsibility for cost sharing was split 60% by Japan and 40% by USA. Lockheed Martin would manufacture all the aft fuselages and wing leading-edge flaps and eight of the ten left-hand wingboxes.
The F-2 program was controversial, because the unit cost, which includes development costs, is roughly four times that of a Block 50/52 F-16, which does not include development costs. Inclusion of development costs distorts the incremental unit cost (this happens with most modern military aircraft), though even at the planned procurement levels, the price per aircraft was somewhat high. The initial plan of 141 F-2s would have reduced the unit cost by up to US$10 million(€7,5 million) per unit, not including reduced cost from mass production. As of 2008, 94 aircraft were planned. Also controversial is the amounts claimed to be paid to American side as various licensing fees, although making use of the pre-existing technology was much cheaper than trying to develop it from scratch.
The F-2's maiden flight was on 7 October 1995. Later that year, the Japanese government approved an order for 141 (but that was soon cut to 130), to enter service by 1999; structural problems resulted in service entry being delayed until 2000. Because of issues with cost-efficiency, orders for the aircraft were curtailed to 98 (including four prototypes) in 2004. Flight testing of the four prototypes were conducted by the Japan Defense Agency at Gifu Air Field.
The last of 94 production aircraft ordered under contract was delivered to the Defense Ministry on 27 September 2011. During the roll-out ceremony of the last production F-2 fighter jet, Mitsubishi Heavy Industries confirmed that production of the F-2 would end and no more F-2 fighters will be produced by the manufacturer. As of 2014 there are 61 single-seaters flying, and 21 two-seat trainers.