Current scholarship on Tokugawa Japan tends to see China as either a model or the other. This study aims to provide a new perspective by suggesting that China also functioned as building blocks for Tokugawa intellectuals to forge Japan’s own thought and culture. They selectively introduced and then modified Chinese culture to make it fit into the Japanese tradition. Chinese culture was highly localized in Tokugawa Japan. Chinese terms and forms survived, but the substance and the spirit were turned into Japanese. Hence, Sino-Japanese cultural exchange in the early modern period should be perceived as the interplay of the Japanization of Chinese culture and the Sinicization of Japanese culture.