This is a big step forward for Japan, whose outgoing leader Taro Aso had previously only committed to an 8% cut.
Kim Carstensen, leader of WWF's Global Climate Initiative, says The decision by an important player such as Japan to get serious about creating a low-carbon future can help break the deadlock between developed and developing countries.
"Climate negotiations are at a critical point and we need urgent progress to get a fair, ambitious and binding deal in Copenhagen this December."
WWF-Japan's CEO, Takamasa Higuchi, adds, "Japan used to be a country driven by industry groups, but now we see a new Prime Minister with true leadership.
"We welcome the courage of Yukio Hatoyama and believe he has the strength to set Japan on track for a low-carbon future which will benefit people and nature, both in Japan and worldwide."
There are no details of the proposal as yet, such as how much of the 25% cuts will be achieved domestically and how much involves offsetting - and it depends on other major economies agreeing ambitious targets at Copenhagen - but it's a huge change in Japan's official stance on tackling climate change.