It is said that the question as to whether The Tale of Urashima is Chinese or Japanese arose from its similarity to the Tale of Yamasachi-Umisachi found in The Kojiki. Indeed they share a great many elements. However, the greatest basic difference between them is found in the theme of a time-slip in another world. Since no gap between the passage of time in the other world and the world of humans is visible in the Tale of Yamasachi-Umisachi found in The Kojiki we can perhaps conclude that this element is Chinese.By comparing The Tale Of Urashima with the Tang dynasty romance, Liu-yi-chuan, which it most closely resembles, I have pointed out all of the elements which they have in common in literary expression and god-like recluse Daoist thought and have also taken a look at all of the differences between the two. The Liu-yi-chuan, which was completed in China during the mid-Tang, is both a story of an extended stay in an enchanted garden and a tale of a water-god's home. However, The Tale of Urashima, while having the two above elements, is very different from the mid-Tang Liu-yi-chuan in that it also has a drifting-ashore motif like that of The Tale of Yamasachi-Umisachi in The Kojiki with the driftingashore motif. In addition, in the Liu-yi-chuan expressions concerning the recluse's elixir and immortality are very prominent while in contrast The Tale of Urashima has little to say about the recluse's elixir and brings up only the god-like recluse idea of immortality. I believe that this indicates that there is something of a difference between the understanding and reception of god-liki recluse Daoism in the two countries.Also, the Chinese conception of time often seen in a story of an extended stay in an enchanted garden as in the expression ,"A day in Heaven is like unto a year on earth,"is found in The Tale of Urashima as "three years is like unto three hundred years," or in expressions like "seventh-generation grandchildren," while in Liu-yi- chuan on the contrary such a view of time is not much touched upon. I have investigated the disparity in the use of such expressions.My conclusion is that ancient Japanese adapted the culture which they imported to their concerns, gradually absorbed it by means of their own peculiar method of digestion, and without being conscious of doing so transformed it into a literature written in classical Chinese peculiar to Japan, so that it went through a process of changing into culture or thought which has a thoroughly Japanese flavor.