I answered this question a few years back, but I'm going to repost it here with some alterations.

Japanese Intelligence was both quite good and quite bad, depending on when exactly during the Pacific War period you're looking.

If you know anything about the way the Japanese military system worked in WWII, it will come as no surprise that there were actually three different Intelligence units: Army, Navy and that of the Foreign Ministry.

Often enough, both Army and Naval intelligence would work on the same project without sharing any information between them. As one can imagine, this usually didn't work well. Since the data was sent to the Foreign Ministry's intel unit, occasionally they could "combine the pieces" provided by the two, but it was still a sub-optimal solution.

Early in the War, the astounding successes of the Japanese require much credit to be given to the Intelligence services. Much of it wasn't really what anybody would consider "spying." The Navy had a man in the Hawaiian Consulate who would regularly "stand on top of a hill" and look into Pearl Harbor to see what ships were there. Army people on the ground in Singapore could deduce the chances of it being successfully defended.

It wasn't until the War got going in earnest and actually overran the Japanese "sphere of influence", if you will, of their Intel services, that things became more difficult. Still, Army Signals Intelligence managed to break some US codes, and they had Soviet codes completely sussed out thanks to the help of a disaffected Polish general. Late in the war, they had managed to break the US M-209 cypher machine and thus had information on upcoming B-29 bomber raids. If they had had the resources to do anything about them, it could have proved costly to the US efforts.

On the Navy side, their primary success was breaking the US merchant shipping codes. While this sounds relatively weak, by being able to track the movements of freighters and transports they could deduce where major operations were about to take place. On the whole, however, the Army's Intelligence unit was much more successful than the Navy's.

As the US pushed its way towards the Home Islands, Japanese intel stopped being as successful as it had been, as it relied quite heavily on HUMINT sources. As the number of places Japanese people could work without suspicion decreased, so did their intel returns. They were always good at Signal Intercepts, but often couldn't figure them out in time to make use of the contents.

As with so many other aspects of the Japanese side of the Pacific War, important information on what was done was destroyed as the surrender approached. In particular, the Foreign Ministry's Intelligence files were almost 100% destroyed. Ironically, much of what we do know about their work comes from the files of British Intelligence, who have quite a bit of intercepted and translated messages from them.

Both the Army and Navy tended to give their Intel branches short shrift. Intel was seen as a less-than-desirable posting, and on the strategic level results from their offices were often ignored, or at least pooh-pooh'd. It was a different story at the tactical level, where Japanese planners paid attention for operations like Pearl Harbor, the invasion of Singapore, and the airborne attack and capture of the Palembang oil fields.

There was nothing wrong with the Japanese intelligence community, really. Better funding and more respect would have gone a long way.

The book Japanese Intelligence In World War II by Ken Kotani is the major reference for this material. That's both because it's so comprehensive and it's practically the only book written on the subject in English.