The article considers controversial history of Russian-Japanese relations in the North Sakhalin during the Japanese occupation from 1920-1925. Escalation of the situation in the region in 1920 led to the entry of Japanese troops. Under the occupation of Japan, North Sakhalin was actively exploited by Japanese entrepreneurs displacing Russian competitors. Japanese occupation authorities did not only engaged in the exploitation of natural resources of Northern Sakhalin, but also invested in the development of transport infrastructure, preservation of the most important fisheries resources. Japanese authorities paid much attention to the development of public education in the Sakhalin territory, the Japanese tried to win the sympathy of the rising new generation of Russians. The Soviet leadership did not accept the legitimacy of the Japanese occupation of Northern Sakhalin and always demanded the withdrawal of troops. Conflict situation in the Russian-Japanese relations in connection with the occupation of Northern Sakhalin was resolved with the help of compromise through mutual concessions.