for jazz,

Yosuke Yamashita - he's more free jazz, though;

Kazumi (sometimes Katsumi) Watanabe - terrific guitarist, maybe a bit too facile, but he's done stuff all over the map. the two albums I have from him are both acoustic duets records (Oyatus & Oyatsu II) but he's got plenty of fusion including some funky stuff.

Sadao Watanabe - best known for his Brazilian/bossa material, but he's been recording since '61 and has material traversing the jazz universe.


For more modern stuff along the lines of what most posters above are recommending, though with a slightly dated twist, I'd suggest trying United Future Organization, who cut a few records in the '90s as a trio of DJs with very eclectic tastes.
A stylistically/chronologically related record is the Jazz Hip Jap compilation. Terrible name but it gives a pretty good overview as to how funk and funky stuff tied into the early '90s scene with the beginnings of nu-jazz and hip hop, including an amusing early cut from DJ Krush with Monday Michiru on vocals.

And for funky stuff, don't write off the Tokyo Ska Paradise Orchestra... they're nominally a ska band, but they've got a lot of classic soul influence in their arrangements and repertoire. I'd recommend their song 'Just A Little Bit O'Your Soul' http://www.youtube.com/watch?v=OnYNHeCqIg0 - especially the version where they got Bernard Purdie into the studio. It's one of my big regrets that I never got to see those guys while I lived there.