Gross domestic product contracted a price-adjusted 1.3% in annualized terms during the October-December period. That compared with an initial reading of a 1.1% contraction released last month.
The economy appears to be returning to a moderate growth path in the current quarter, as exports to Asia and other key markets pick up. But economists say the government of Prime Minister Naoto Kan faces an uphill battle achieving higher growth, as it grapples with a massive public debt, rising commodity prices and a treacherous political environment.
Private consumption fell a revised 0.8% from the previous quarter, slightly worse than the initial estimate for a 0.7% fall.
Capital spending was revised down to a 0.5% on-quarter rise from a preliminary 0.9% rise.
The fourth-quarter GDP figures also confirm Japan has fallen behind China and is now the world's third-largest economy. The revised figures showed Japan's nominal GDP for 2010 was 479.179 trillion yen, or $5.474 trillion, below China's $5.879 trillion in the same year.
Despite the revisions, Japan's economy still grew 3.9% in all of 2010, unchanged from the initial estimate, making it the best performer among the Group of Seven industrialized nations.