The article focuses on the issues of Russia-Japan negotiations on the peace treaty and on Kuril Islands dispute settlement during the period between 2013 and 2019. Despite bilateral rapprochement in trade, political, and humanitarian areas during that period, there is still disagreement on several important issues, such as sovereignty over the Kurils, terms of territorial delimitation, and importance of territorial dispute for bilateral relations. In this context, the author examines Russian-Japanese plans for joint economic development of the Kuril Islands and also those political and military factors that hinder Russia-Japan political cooperation. She argues that Russia and Japan need to continue their rapprochement and peace treaty negotiations to upgrade their relations.