History of colonies under the rule of Japanese Empire in the first half of the 20th century has not been explored well enough so far. For example, history of Karafuto governorate “(1905-1945), which existed in the southern part of Sakhalin, is barely covered while some aspects of its history are not known at all. This article focuses on history of formation and socio-economic structure of Karafuto governorate - such as territorial development after the Russo-Japanese war, its role and status in the colonial system of Japan, the use of the main economic resources of the island and creation of socio-cultural space along with the memorialization of the colonial past of the northern borders of Japanese Empire. Besides that, in this article author highlights the process of liquidation of the governorate (it started after accession of the southern part of Sakhalin to the USSR territory after the Second World War) followed by passing the governance on to the soviet administration, co-residence of Soviet and Japanese people on the same territory during 1945-1948, along with deportation of Japanese people and fate of Korean population of the island. The article gives the examples of preservation of memory of Japanese presence on Sakhalin Island in both modern Japan and Russia.