Koizumi is riding high in opinion polls and the national ballot will be the first since he rose to power in April 2001 on a wave of voter discontent.
It offers a chance for the prime minister to solidify his ruling Liberal Democratic Party's dominance in Parliament's lower house — the more powerful of its two chambers.
"The time has come to test whether people support my policy of reform," Koizumi told reporters. "I believe we will win."
With his job at stake and growing resistance to his reforms from within the LDP, Koizumi will need to turn his strong public approval ratings — around 60 percent — into a major win for his party.
Chief Cabinet Secretary Yasuo Fukuda announced the polling date after Koizumi dissolved the lower house.
Lawmakers stood up in the chamber, raised their arms in the air and repeatedly yelled "Banzai!"- an expression of congratulation that means "long life."
All 480 seats in the lower house, including Koizumi's, will be up for grabs.
Despite his confidence, Koizumi's governing LDP will face a rejuvenated opposition, following the Democratic Party's merger with a smaller party.
Analysts say it's unlikely that the opposition will dethrone the LDP for the first time in a decade. But they predict some voters will defect to the opposition.
"The Democratic Party has a lot of talented young lawmakers. And urban voters don't like the LDP's brand of 'boss politics,' or the way the LDP fields the sons of powerful politicians as candidates," said Taro Yayama, a political analyst.
The LDP's ruling alliance — which includes the Buddhist-backed New Komeito and New Conservative parties — controls a majority in the chamber, with 285 seats. Ensuring the majority would keep Koizumi in power for the remainder of his three-year term as LDP president.
The Democratic Party — the largest opposition bloc — has 137 seats.
Since rising to power 2 1/2 years ago, Koizumi has vowed to do away with pork-barrel politics and wasteful public works spending, and to deliver economic reforms.
Although he has capped government spending, pushed through laws to deregulate industry and begun steps to privatize government institutions like the post office, those policies have yet to restore prosperity.
Signs of a recovery have emerged. But joblessness remains near a record high, and economists say the yen's sharp appreciation against the dollar in recent weeks could put the brakes on Japan's export-driven economy. A weaker yen hurts Japanese exporters by diminishing the value of their overseas earnings.
Some analysts say the opposition's lack of a charismatic leader and weak voter base will help Koizumi.
But the LDP is also battling its image as a bastion of old-style back room politics. While the prime minister's Cabinet reshuffle late last month and his choice of Shinzo Abe, a telegenic 49-year-old lawmaker, for the LDP's No. 2 slot of secretary-general has given the party a fresh look, it's unclear whether voters will be convinced the party has changed, analysts say.
Another unknown will be the entrance of former Foreign Minister Makiko Tanaka, an outspoken conservative and one of the few politicians in this country who can rival Koizumi's popularity. She announced this week she will try to regain her seat as an independent candidate.
Tanaka, the daughter of a former prime minister, became the first woman in Japan to head the foreign ministry when Koizumi named her to his first Cabinet in April 2001. She was later pushed out after a public spat with her subordinates and quit Parliament over a funds misappropriation scandal. Last week, she was cleared of any wrongdoing.
In Parliament's final act before the lower chamber's dissolution Friday, the upper house passed into law a two-year extension of key anti-terrorism legislation. Since the law was first passed in October 2001, Japanese naval ships and hundreds of military personnel have transported fuel and supplies for U.S. and other allied vessels involved in rooting out remnants of the Taliban and Al Qaeda in Afghanistan.
By Kenji Hall