After the introduction of guns at Tanegashima in 1543 and the beginning of Christian proselytizing in 1549, the leaders of various domains began to invite Portuguese ships for the purpose of trade. During the Age of Exploration, the Portuguese ships used Goa (India) as a base, traded in Southeast Asian venues such as Malacca, Macao and Nagasaki, and returned to Goa after about three years. Products such as raw silk, silk and cotton fabrics, ivory, coral and sugar were imported into Japan by the Portuguese. The exports from Japan consisted mainly of silver, iron, folding screens, swords and sundry goods. Tigers, peacocks and other exotic animals were among the imported items, such as the elephant given to Toyotomi Hideyoshi by the Governor of Luzon.

In 1550, a Portuguese ship sailed into the port of Hirado, the first European trading ship to enter present-day Nagasaki Prefecture. Five more Portuguese ships followed in 1562. The Portuguese later moved their hub of activity to Yokoseura in the Omura domain (present-day Saikai City) and then to Fukuda (Fukuda Honmachi, Nagasaki City). Opened in 1565, Fukuda was hampered by its location directly facing the open sea. The Portuguese moved again to Kuchinotsu on the Shimabara Peninsula, but, preferring to remain in Omura territory, they surveyed the alternative port of Nagasaki. In 1571, a Portuguese ship entered the port accompanied by a Chinese ship chartered by Portuguese traders. Subsequently, Portuguese ships visited Nagasaki every year, and the town developed rapidly into a thriving port for the European trade.

In 1580, Omura Sumitada ceded Nagasaki to the Society of Jesus, but seven years later national leader Toyotomi Hideyoshi issued a missionary expulsion order and placed Nagasaki under his direct jurisdiction. Next, he ordered the arrest of missionaries and Japanese Christians in Kyoto and Osaka and sent them to Nagasaki, where they were executed at Nishizakaon February 5, 1597, an event is remembered as the Martyrdom of the26 Saints of Japan. At first, the Tokugawa Shogunate under Tokugawa Ieyasu took a lenient stance toward Christianity in order to encourage trade. Christianity was widely and deeply worshiped; it is said that about 760,000 people converted during the eight decades between 1549 and 1630. However, the Shogunate began to suppress Christianity and finally issued a ban on the foreign religion in 1612. Many followers, including Takayama Ukon, were exiled to Manila and Macao. Crackdowns increased and Christian persecutions grew in severity, including torture and forced apostacy, intimidation and brutal executions.

To prevent the spread of Christianity, the Tokugawa Shogunate built an off-shore island called Dejima to intern Portuguese residents living freely in Nagasaki. The island was completed in 1636 through the investment of 25 leading Nagasaki merchants. Dejima was also called "Tsukishima" (erected island) because it was built by reclaiming land from the harbor, as well as "Ogishima" (fan island) because its distinctive shape. The proposal to build the island, the craftsmen who designed and supervised the construction work, and the civil engineering techniques they implemented remain a mystery to this day.

In 1600, the Dutch ship De Liefde drifted ashore at Bungo (present-day Oita Prefecture), marking the beginning of exchange between Japan and the Netherlands. The pilot, an English sailor named William Adams, was enlisted by Shogun Tokugawa Ieyasuto serve as a diplomatic adviser. Alerted by Adams, the Dutch East India Company dispatched two trading ships to Japan in 1609 and opened a factory(trading post) in Hirado under official permission. The English East India Company also opened a factory in Hirado, and fierce competition arose among the Portuguese, Dutch, English, Chinese and even Japanese, who operated a fleet of “red-seal ships.”Increasingly wary of Christianity after the Shimabara Rebellion of 1637, the Shogunate expelled the Portuguese from Japan in 1639. The Dutch, who had demonstrated loyalty to the Shogunate by bombarding Hara Castle during the rebellion, eventually won a monopoly on the trade with Japan.

In 1639, the Portuguese were banished from Dejima, leaving the island unoccupied. Two years later, however, the Dutch East India Company moved its factory from Hirado to Dejima, and for the following 218 years the island played an important role in the modernization of Japan as the country’s only open window to Europe.

In 1641, the Tokugawa Shogunate ordered the Dutch to provide information about the Portuguese in order to thoroughly enforce the Christian prohibition and expulsion of Portuguese nationals. This was an important condition for the right granted to the Dutch to visit Japan. When a Dutch ship entered the port of Nagasaki, the Japanese interpreters interviewed the chief factor about world events, translated the information, and sent a report to the Tokugawa Shogunate signed by the Nagasaki Magistrate. This document was called the Orandafūsetsugaki, or “List of Rumors from the Dutch.”

In 1598, trade fleets organized by the merchants of Amsterdam and Rotterdam set sail for Southeast Asia and engaged in lucrative trade in the spice-producing areas of Bandung and Amboyna in the Moluccas. In 1602, however, the various companies, faced with competition and decreasing profits, joined to establish the United East India Company (V.O.C). The company was granted special protection and government permission to trade exclusively in the region from the Cape of Good Hope to the Strait of Magellan. Various powers were recognized, such as the right to sign treaties and alliances, exercise military power, coin money, and appoint local secretaries and judicial officers. It was only a matter of time before the V.O.C. “east indiamen” sailed into Nagasaki Harbor to trade at Dejima.

From 1621 to 1847, more than 700 Dutch ships visited Japan. Propelled by seasonal winds, the wooden sailing vessels usually left Batavia (now Jakarta) in early summer, passed through the Straits of Bangka and Taiwan and entered the port of Nagasaki via Nomozaki. When a Dutch ship anchored off Dejima, Japanese officials checked the ship's itinerary and number of crew members and inspected the cargo. Unloading started a few days later, followed by the commotion of bidding and bartering. The main imports and exports in the early Edo Period were raw silk from Bengal and Tonkin and Japanese silver, respectively. From the middle of the Edo Period, the imports came to include cotton fabrics, velvet, pepper, sugar, glassware and books, while the exports extended to copper, camphor, ceramics and lacquerware.

The brisk trade conducted to date between the Netherlands and Japan began to decline in the early 18th century. One of the causes was Japan's trade limitation policy. Initially, the Tokugawa Shogunate did not impose any restrictions on trade, but in 1685, the volume of trade with the Netherlands was limited to 3,000kanme of silver. Furthermore, in 1715, the number of Dutch ships entering the port was limited to two per year. Then in 1790, only one ship per year was permitted, and the trade volume was reduced to700kanme of silver. Meanwhile, the management of the Dutch East India Company gradually weakened, the French Revolution of 1789 causing a particularly heavy blow to the Netherlands. In 1795, the French Revolutionary Army occupied the Netherlands, and the Republic of Batavia was born. In 1799, the Dutch East India Company was forced to dissolve.

As a result of defeat in the Opium War, China was forced to cede Hong Kong to Britain and open five ports including Canton (Guangzhou) and Shanghai as terms of the Treaty of Nanjing. News of the Opium War reached Nagasaki via the Dutch, who submitted a letter of to the Tokugawa Shogunate recommending the opening of the country. The first official American envoy visited Japan in 1846, and Commodore Matthew Perry arrived in Uraga in 1853, The first treaty with Japan, the Japanese-American Treaty of Amity, was concluded and soon followed by similar pacts with Britain and the Netherlands. In 1856, American diplomat Townsend Harris came to Japan to negotiate a commercial treaty. Faced with the intimidating backdrop of American military power, the Tokugawa Shogunate acquiesced and signed the US-Japan Treaty of Amity and Commerce in 1858, marking the end of Japan’s isolation policy.

The limitations imposed on the Dutch were lifted by the Japanese-Dutch Treaty of Amity signed in 1856. Japanese and foreign residents were allowed to enter and leave Dejima freely as a result of the Ansei Five-Power Treaties of 1858. A consulate of the Netherlands was established on the island, and business was transferred to the Netherlands Trading Society, bringing an end to the long history of the Dejima Dutch Factory. In 1866, Dejima was absorbed into the Nagasaki Foreign Settlement.

After the opening of Nagasaki in 1859, Dejima underwent major topographical changes, including the expansion of the western and southern sections of the island to modernize the trade port of Nagasaki. Later, parts of the periphery were reclaimed from the sea, and a slice of about 18 meters was removed from the northern side of the island as part of the Nakashima River Diversion Project started in 1885. Finally, as a result of the port improvement work conducted in 1904, the fan-shaped island completely disappeared.