Space One's Kairos No. 2 rocket lifted off from a launch site in the mountainous Wakayama prefecture in central Japan.
The company announced that it aborted the flight after determining it would be unable to complete its mission.
The cause of the failure was not immediately clear, and Space One is expected to provide further details at a press conference later on Wednesday.
The mission, initially scheduled for Saturday but postponed twice due to strong winds, came nine months after a failed debut launch in March, when the rocket was intentionally destroyed just five seconds after takeoff.
That earlier mission was carrying a government satellite meant to monitor North Korea's missile activities and other military developments.
For this launch, Kairos No. 2 carried five small satellites, including one from Taiwan's space agency and others from Japanese startups.
Space One said it had resolved the issue that caused the first failure, which stemmed from a miscalculation in the rocket's first-stage propulsion system.
The Tokyo-based startup aims to be the first private Japanese company to successfully place a satellite into orbit, offering cost-effective space transport services to boost Japan’s lagging space industry.
Space One was established in 2018 with funding from major Japanese companies, including Canon Electronics, IHI, Shimizu, and prominent banks.
The company plans to provide up to 20 commercial launches annually at a lower cost, a significant increase over the six flights currently planned under Japan’s government-led space program.
Japan’s space initiatives are primarily driven by the Japan Aerospace Exploration Agency (JAXA) and major industry players such as Mitsubishi Heavy Industries and IHI.
These organizations focus on the development of two flagship rockets: the large H3 and the smaller Epsilon, to serve the growing global demand for satellite launches.
Japan hopes that Space One can help develop a competitive domestic space industry that rivals the United States and other major players in the market.