Officially named the Naoki Sanjugo Prize, this award was established in 1935 at the same time as the Akutagawa Prize by Kan Kikuchi (1888–1948), founder of the magazine Bungei shunju, in memory of his friend the writer Sanjugo Naoki (1891–1934), who had played a major role in the success of the magazine. Kikuchi funded the prize with his own money.
In principle, the prize is awarded to an individual winner twice a year, but the prize committee may also determine there to be no winner or declare two winners at once. Awards were suspended for a number of years at the end of and following World War II, but have otherwise continued without interruption.
The prize goes to a novel-length work or collection of popular fiction that has appeared in book form. Though once aimed at writers early in their careers, there has been a shift in recent years to more established authors. Some 250 to 300 works are considered in each six-month period, with five or six titles placed on a short list to be evaluated by a prize committee made up of veteran authors. The media attention surrounding the twice-yearly joint announcements of the Naoki and Akutagawa Prizes far surpasses that accorded any other prize. Not an easy award to capture even for authors who turn out one bestseller after another, it is coveted with increasing zeal as writers advance in their careers.