It is first time since 2000 that G7 countries have jointly intervened in the currency markets.
The yen weakened after the intervention, recently trading at 80.94 against the US dollar.
Earlier this week, the yen hit 76.25, its strongest since World War II, adding to fears over Japan's recovery.
The nuclear crisis in Japan, coming soon after a huge earthquake and tsunami devastated the coastline, has hit financial markets around the world, with many worried about the impact on the global economy.
The action began in Japan with the central bank selling yen to try to weaken its value.
It was later followed by similar measures by the Bank of England, the European Central Bank, the US Federal Reserve and the Bank of Canada.
The coordinated action was agreed by the G7 finance ministers on a conference call.
News of the decision had an immediate impact as the Nikkei 225 index gained 2.7% on Friday to close at 9,206.75 points.
US shares rose 1% to 11,889, while shares in Europe also responded to the intervention.
The UK's FTSE 100 index rose 0.4% to 5,718 and the benchmark German and French indexes were both higher.
"As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability," the G7 said in their statement.
"We will monitor exchange markets closely and co-operate as appropriate."
Meanwhile, the Bank of Japan injected an extra 3tn yen ($37bn; £23bn) into the markets on Friday in a bid to shore up confidence and ensure liquidity.'Slow things down'
A strong currency may hurt recovery prospects of some of Japan's biggest companies
The intervention by the G7 nations comes after volatility in markets in the aftermath of the earthquake.
Japan's main Nikkei 225 index lost more than 16% on first two days of the week before recovering on Wednesday.
But just as the stocks were recovering, the yen hit its record-high sending them into a tumble once again.
Japan is the world's third-biggest economy and relies heavily on exports. A rise in the yen makes Japanese products less desirable abroad.
Nissan has restarted work at at least one of its four car assembly factories, but others are struggling still. Carmaker Toyota has halted operations at its 12 main assembly plants in Japan.
Nissan and rival Honda each lose around 2bn yen in profit a day with the shutdowns.
Electronics manufacturers fared little better.
Sony opened one factory, which makes optical films used in liquid TV screens, and adhesives. Seven other plants, which make everything from Blu-ray discs to lithium batteries, remain closed.
The nuclear and earthquake crises in Japan will cause a "major slowdown" in the airline industry, according to the International Air Transport Association.
It said airlines would not start to recover until at least the the last six months of the year.
Analysts say the G7 decision is likely to soothe nerves, though it may not have a drastic impact on the yen's value.
The intervention marks a turnaround from the situation last year, when there was much talk of countries trying to weaken their currencies to boost sagging economic growth.
"It's completely different from last year," said Masafumi Yamamoto, chief foreign exchange strategist at Barclays Capital in Japan.
"People were talking about currency wars and competitive devaluation. In that sense, it was very significant that speculative yen appreciation can be attacked by coordinated action."
The G7 countries are the US, Japan, Germany, France, the UK, Italy and Canada.
Source : BBC News