But Finance Minister Naoto Kan suggested stricter sanctions might be largely symbolic. Japan already has measures in place, including a trade ban and restrictions on remitting funds.
"There's a question about how effective these measures have been, but we should consider such options to show our stance under the current circumstances," he told reporters.
Regional tensions continued to rise on Tuesday, when South Korea's Yonhap news agency said North Korean leader Kim Jong-il had ordered his military to be on a combat footing. South Korea has banned all trade, investment and visits with North Korea.
The Japanese government already requires that remittances to North Korea of more than 10 million yen ($110,800) be reported to the finance ministry, but is considering lowering this limit, the Nikkei newspaper said.
Tokyo may also tighten restrictions on travel between the two countries and ban ships that have visited North Korea from entering Japanese ports, the paper said.
Japan already bans North Korean ships from visiting Japan, among a series of measures introduced over the past few years to protest the North's nuclear and missile tests and its abduction of Japanese citizens in the 1970s and 1980s.