Palau has ended its agreement with the Sea Shepherd Conservation Society for providing marine surveillance in its waters.
The agreement was reached in March but then last month Palau announced it was reconsidering after receiving a counter offer from Japan.
Japanese officials offered to provide Palau with its own patrol vessel and financial support as an alternative to Sea Shepherd's involvement.
Sea Shepherd has regularly clashed with Japanese whalers in the Southern Ocean.
Palau was recently declared a shark sanctuary but remains vulnerable to poachers.
The Examiner website reports Sea Shepherd as saying it's optimistic Japan's offer is sincere and not merely a ploy to negate intervention against poachers whose unlawful catch often ends up in the Japanese market.
Sea Shepherd says it's already in discussion with several other Pacific island nations who are keen to work with them to defend their marine environments.