This article analyzes the diplomatic strategy employed by Prime Minister Abe Shinzō regarding the dispute with Russia over the Northern Territories (South Kuril Islands). After returning to the post of prime minister in December 2012, Abe put much emphasis on approaching Russia in order to strengthen mutually beneficial economic exchange as well as to counterbalance the Chinese influence in the region. Nevertheless, the territorial dispute with Russia over the Northern Territories remained an obstacle in achieving full partnership between both countries. This article argues that, despite Abe’s strong command over foreign policy-making and his eagerness to establish a relationship of trust with President Vladimir Putin, the unstable international environment has complicated the resolution of the dispute. The analysis relies on the neoclassical-realist interpretation of foreign policymaking. According to this theory, it is the structure of the international system that delineates the constraints on the rational foreign policy of a given country. At the same time, however, depending on circumstances, domestic-level factors might exert a significant impact on the pace and intensity of diplomatic endeavors. In this vein, the policy agenda, political strategy, and institutional prowess of the Abe Cabinet were important factors in pushing forward negotiations over the territorial dispute with Russia. Nevertheless, it is the international determinants that most heavily influenced the extent to which President Putin was willing to compromise on the Northern Territories issue.