Previous research on identity development among adolescents has focused on the processes involved. However, it is unclear how the sense of identity (synthesis and confusion) develops and how it relates to life satisfaction. This study aims to examine the relationship between sense of identity and life satisfaction among Japanese youth living in the urban Kanto, Kansai, and Chubu areas. A total of 5,047 Japanese youth (49.7% female; Time 1 M[subscript age] = 17.08 years, range = 12-22 years) in four age groups (early adolescence, middle adolescence, late adolescence, and young adulthood) participated in a three-wave longitudinal study. Latent growth modeling (LGM) analysis revealed that from early to middle adolescence, synthesis continued to be higher than confusion, whereas from late adolescence to young adulthood, confusion tended to be higher than synthesis. The results of the LGM further showed that the change in synthesis was positively related to the change in life satisfaction and the change in confusion was negatively related to it in all age groups. Using latent class growth analysis (LCGA), five identity classes were extracted: high synthesis-low confusion, low synthesis-high confusion, high synthesis-high confusion, low synthesis-low confusion, and moderate synthesis-moderate confusion. LCGA revealed that youth in the high synthesis classes had a higher sense of life satisfaction than did youth in high confusion classes. These findings provide critical insights into trajectories of identity formation and the relationship between identity development and life satisfaction among Japanese youth that can inform future research and programs designed to facilitate their identity formation.