The US restaurant chain has a 50 percent share of McDonald's Japan, but said said last year it was looking at selling the stake.
The US restaurant chain has a 50 percent share of McDonald's Japan, but said said last year it was looking at selling the stake as the unit's balance sheet deteriorated following a series of embarrassing problems, including a human tooth found in some fries.
The incidents led to McDonald's Japan closing some of its 3,000 outlets and recording its first loss in a decade.
But on Tuesday, the parent company said the Japanese market had bounced back and the sale plan was off the table.
"We recently completed our review over our ownership stake in McDonald's Japan, and made the decision to not proceed with the transaction at this time," McDonald's chief financial officer Kevin Ozan told an earnings call on Tuesday in the United States.
"We are confident that we have the right capabilities and customer focus plans to grow our business in Japan, and we believe the market is poised to maintain the strong momentum."
McDonald's reported higher first-quarter earnings Tuesday, citing a pick up in key regions, including the United States and China, as well as Japan.