Takayama was a renowned feudal warlord who protected Christians at a time when authorities attempted to stamp out all vestiges of the religion.
About 12,000 people attended the ceremony for Takayama Ukon in Osaka which was conducted by Cardinal Angelo Amato, representing Pope Francis, and is a step on the path to possible sainthood.
Christianity came to Japan in 1549, introduced by Jesuit missionary Francis Xavier and for decades the faith made dramatic inroads before coming under official persecution in the late 16th and 17th centuries that forced it underground.
Takayama, born in 1552, was a renowned feudal warlord who protected Christians at a time when authorities attempted to stamp out all vestiges of the religion.
He died in Manila in 1615 in exile after refusing to renounce the faith as demanded by the shogun, or military ruler of Japan, who viewed Christianity as a threat to national security and independence as Western colonialism made inroads in Asia.
In the ceremony Tuesday, hundreds sang in a choir, while red-robed clergy read from the Bible.
Amato, reading an Apostolic Letter from Francis, "proclaimed as Blessed" Takayama, lauded as a man who chose faith over worldly success and material comfort.
His beatification coincides with renewed attention on the history of Christianity in Japan with the release of the Martin Scorsese movie "Silence".
The film, a pet project of the renowned American director, chronicles the plight of Jesuit missionaries in Japan when Christians were tortured to force them to renounce their faith.
The movie was adapted from Japanese author Shusaku Endo's 1966 novel of the same name.
Christianity was initially met with a mix of curiosity and acceptance among members of the Japanese public.
Its popularity spread and there were an estimated 220,000 to 300,000 followers in Japan in the early 1600s out of a population of 15-20 million.
But powerful warlords with national influence, cognisant of the Spanish takeover of the Philippines, began to fear the foreign faith and efforts to erase it began in 1587.
Missionaries were expelled, while Japanese adherents were ordered to publicly renounce their faith, sometimes by stepping on a likeness of Jesus or the Virgin Mary.
In 1614, the government banned Christianity completely.
Takayama, who was acclaimed as a master of Japanese tea ceremony, was not subject to abuse when he refused to renounce his faith unlike many of his fellow believers.
The Japanese government calculated in 2015 that there were at least 962,731 Christians -- Catholic and Protestant -- in the country, accounting for less than one percent of the population.