The fate of the Emperor (Hirohito) was not decided until after the occupation began. There were a number of different views, and one of them was to hang him for war crimes. Another was to not kill him, but have him deposed and replaced as emperor by his son. However, cultural advisers suggested that this not be done, as the Emperor would be an important figurehead to support the new occupation by US troops. His son, the crown prince (and current emperor, Akihito) was only about 11 years old at the end of the war, so couldn't serve in any official capacity. There was a lot of concern at the beginning of the occupation about how it would go. Would Japanese citizens fight the US all the way, with terrorist attacks and frequent violence? Or would they be more cooperative?

In the book The Chrysanthemum and the Sword, anthropologist Ruth Benedict, who had been charged by the US government with studying the Japanese, came out on the side of preserving the life and position of the Emperor and the imperial system. MacArthur decided that it would lead to a better outcome if the Emperor were to survive and it would be only the political and military leaders who would be tried for war crimes. However, at the same time, the US occupation worked to decrease the emperor's influence and status. You can kind of see this in the following photo, which was very important within Japan, but I think Americans are less likely to truly appreciate the nuances of its symbolism: https://iconicphotos.wordpress.com/2012/09/28/when-macarthur-met-the-emperor/ It features MacArthur in casual dress, in a casual and relaxed pose, towering over the emperor (no one is supposed to have their head be taller than the emperor's), and with the emperor going to visit MacArthur in MacArthur's office, rather than MacArthur having to seek supplication in the Imperial residence. The Emperor in turn is dressed and stands very formally. Prior to this, images of the emperor were very formal and grandiose, in contrast to some short guy in a common office. When the emperor had announced the surrender over the radio several weeks earlier, your average person couldn't even understand what he was saying, because the way he spoke was using so formal a language that it wasn't comprehensible to your average speaker.

Soon, the occupation would strip the emperor of much of his formal power but he remained a figurehead. His children received a more western education, and the emperor and the rest of his family began devoting themselves to being present at diplomatic events, while occupying their time with the harmless hobby of marine biology, studying a particular type of fish, the goby. A number of members of the imperial family have had articles published in scientific journals about these fish. The emperor's family also began associating more with people outside of the palace and the royal family. Akihito was the first crown prince to marry a commoner--Michiko Shoda. Prior to the occupation, there was a whole Japanese aristocracy--princes, dukes, lords, etc. These were abolished by the occupation. But the imperial family remains, and people know who had titles in the past. The Imperial Household Agency runs the imperial household, and its members are descendants of the imperial family and aristocracy. They tend to be extremely conservative and snobbish, and were, well, extremely pissed that some upstart commoner like Michiko could be elevated to Crown Princess. They basically bullied her and pressured her for decades, as did her mother-in-law, Empress Nagako, and kinda broke her. When she had a miscarriage, she was cruelly bullied by members of the imperial household agency for this "failure". She has had several nervous breakdowns, and stopped speaking at all for awhile. Not only public speaking, she just completely stopped talking. Her official duties were curtailed and she doesn't make that many public appearances. Sadly, the same fate seems to have befallen her daughter-in-law. That is, the current crown prince, Naruhito, fell in love with a commoner, Masako Owada. At the time of their meeting, Owada was a formidable woman--fluent in multiple languages, she was a graduate of Harvard University and Oxford University and had been a student at Tokyo University, and had begun a promising career in the diplomatic corps, one of few women to do so. Owada wasn't interested in the crown prince, because she'd seen what had happened to Michiko and she had her own brilliant career path to follow. Also, the crown prince wasn't seen as a dreamboat by the ladies. But she was pressured a lot to marry him, and despite multiple refusals, she finally agreed. The general public attitude towards her was sympathy at the ordeal she was going to face. And things didn't go well. She, too, was bullied by the Imperial Household Agency and was under a lot of pressure to have a child. She was 29 when they married, and didn't get pregnant for many years. Eventually, she did have a child, but it was a girl, who can't succeed to the throne. Masako has not appeared at any public functions for well over a decade, due to unspecified emotional complaints. Naruhito will become emperor eventually, but, with no male heir, his brother Fumihito will succeed him as Emperor, and then Fumihito's son, Hisahito.