The opposition parties have submitted a no-confidence motion against the government. By itself it's kind of a pointless gesture, and a bit hard to understand; they don't have the votes to make it pass, and they've been getting plenty of criticism for wasting time with this. The DPJ government has been making the expected hash of things of course, but the opposition has also been obstructing things at every turn.
But Ozawa is urging his followers to vote for the no-confidence motion. In a by now familiar pattern, when he realizes he won't be Prime Minister within his current party he leaves and takes his followers with him, and damn the consequences. It's unlikely that he'll be able to round up the 86 DPJ rebels he'd need to topple the Kan government, but the DPJ leadership (what's left of it) has stated that anyone voting for this motion will be expelled from the party. This includes at least five fairly high-ranking party members.
Effectively, the DPJ is splitting down the middle. MTC argues that this is the end of the DPJ. While it's likely the end of the DPJ as an amorphous big-tent alternative to the similarly sprawling LPD, I'm not as sure it's the end of the DPJ party brand.
The rebels are unified mostly in their fealty to Ozawa himself, but to some extent the rebelling diet members all share an ideology beyond that as well. Ozawa has tended to recruit candidates that can subscribe to his vision of Japans political future. They'll leave, and, I guess, either try to build a new party together with a rump of members from the LDP; or possibly try to merge with another existing party.
But that also means the remains of the DPJ are free of a long-running ideological and personal split. The DPJ, like the LDP, has never really made much sense, with members representing almost every conceivable point on the political map. The remaining DPJ will possibly be a fair bit more unified in its political outlook, and with less personal acrimony to thwart coherent policy-making.
And of course the same thing can be said of any future Ozawaist party; if they manage to create a viable organization then it, too, should be able to present a clearer alternative to the voters than its members ever could as part of the DPJ. The New Komeito, Everybody's Party, the long-established small parties all have a coherent ideology of sorts (though the Social Democrats and the New Komeito seem to share "being in power" as a major part of it).
That leaves the LDP as a sprawling "everything-for-everyone" big-tent party. But LDP support is more and more concentrated in the rural Japan, areas that have been losing population and influence for a long time now. They rely on a voting district division that gives disproportionate power to rural areas at the expense of urban Japan, but the supreme court has recently ruled this discrepancy as illegal and unconstitutional. It is very likely that the LDP power base will be substantially reduced when the redistricting happens. That disruption will hopefully be enough for LDP members to split into more coherent parties as well, and will in any case lessen the LDP influence no matter what.
We might see the beginning of the end of the current Japanese political system. A good thing in the long run. Hopefully.
Edit: MTC reports the rebels may have the needed votes, and Kan may be ready to resign. In any case, that doesn't really change the longer-term outlook; the party is falling into pieces, the question is simply who owns what piece.