The key role of temporary help agencies in the expansion of the external market for labor in Japan is the subject of this article. As a result of deregulatory changes in and after 1999 in Japan, the temporary help industry has impacted on changes in firms' reliance on external labor. Based on a survey of and interviews at temporary agency firms, we found considerable heterogeneity among THAs. One segment of large agencies exhibited a strong market orientation in supplying business services, while two other segments of THAs were continuing, to varying degrees, to draw their business from either capital-related or parent companies within their groups. © 2009 Japanese Studies Association of Australia.