Tokyo was initially constructed in 1457; the city was known as Edo (江戸). The Tokugawa shōgunate was established in 1603 with Edo as its seat of government (de facto capital). The emperor's residence, and formal capital, remained in Kyōto, the city had been the actual capital of Japan until that time. In September of 1868, when the shōgunate came to an end, Emperor Meiji ordered Edo to be renamed "Tokyo," meaning "Eastern Capital." The new name was meant to emphasize Tokyo's status as the new capital of Japan, both temporally and spiritually.
Tokyo has been generally accepted as the sole capital of Japan since 1869, when the Emperor took up permanent residence there. However, the capital was never legally "transferred" to Tokyo, leading some to question whether Kyōto may still be the capital, or a co-capital.
The Great Kanto earthquake struck Tokyo in 1923, killing approximately 70,000 people; a massive reconstruction plan was drawn up, but was too expensive to carry out except in part. Despite this, the city grew until the beginning of World War II. During the war, Tokyo was heavily bombed, much of the city was burned to the ground, and its population in 1945 was only half that of 1940.
Following the war, Tokyo was under military occupation and governed by the allied forces. General Douglas MacArthur established the occupation headquarters in what is now the Dai-Ichi Seimei building overlooking the Imperial Palace. The American presence in Tokyo made it an important command and logistics center during the Korean War. Tokyo still hosts a number of U.S. military bases, including Yokota Air Base.
During the 1950s and mid-1960s, Japan experienced what is widely described as the "economic miracle", which transformed the nation from wartime devastation to the world's second-largest economy by 1966. During this period, Japanese government policy placed priority on the development of infrastructure and manufacturing industries over social welfare. As a result, Japan came to dominate a range of industries including steel, ship-building, automobiles, semiconductors, and consumer electronics. Tokyo's re-emergence from wartime trauma was complete at the 1964 Summer Olympics, which publicized the city on an international stage and brought global attention to the "economic miracle".
Beginning in the 1970s, Japanese cities experienced a massive wave of expansion as laborers began migrating from rural areas, and Tokyo was one of the most dramatic examples. As it grew steadily into the economic bubble of the late 1980s, Tokyo became one of the most dynamic cities on Earth, with a tremendous range of social and economic activities, myriad restaurants and clubs, a major financial district, tremendous industrial strength, a wealth of shops, and world-class entertainment opportunities. The construction boom of the bubble years was one of the greatest in world history (as judged by the level of building expenditures in relation to the size of the economy), leading Tokyo to have an enormously more modern capital stock of buildings than similar metropolises such as London and New York City. Although the recession following the bursting of the "bubble economy" in the early 1990s hurt the city, Tokyo remains the predominant economic center of East Asia, rivaled only by Hong Kong and Singapore.
On March 20, 1995, Tokyo became the focus of international media attention in the wake of the Aum Shinrikyō cult terrorist organisation attack with Sarin nerve gas on the Tokyo subway system (in the tunnels beneath the political district of central Tokyo) in which 12 people were killed and thousands affected (see Sarin gas attack on the Tokyo subway).