The automated doll developed at the University of Tsukuba, called Yotara, giggles and "wakes up" when a rattle is shaken.
He sulks and dozes off like a real baby and smiles when his stomach is rubbed. The robot can also sneeze and have a runny nose, thanks to a heated water pump system.
The students of the Graduate School of Comprehensive Human Sciences at the university created the robot last year with touch sensors. A projector beams the facial features onto a warm silicon balloon which makes up Yotara's face.
The robot's facial expressions and body movements change according to pressure applied to different parts of its body. The information collected through touch sensors under the silicon skin is processed by a special program.
It then changes the baby's expression projected onto the balloon-face from behind. A bonnet with little bear ears and a pastel color blanket cover the robot's limbs which simulate wiggling with the help of a geared motor.
"We wanted to create a new type of robot that is soft, cuddly and cute," said project leader Hiroki Kunimura. "We'd like people to experience the innocent, joyful expressions typical of small babies."
"Through this experience, it would be great if some people started feeling that they wanted to have their own baby, if they started feeling that working is not everything."
According to a ministry of labor and welfare report, Japan is facing serious economic consequences with over a quarter of its citizens expected to be aged over 65 by 2015.
The population is expected to shrink by a third within 50 years if the birth rate does not increase.
For more information, see SkyNews.com.