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Because they coincide in dates, the Tanabata Festival was originally connected to the Buddhist day of remembrance for ancestors, called the Obon festival. After the customs spread to the general public, the festivals became distinctly different. In modern times, the Tanabata is held in July, although its date can vary according to the lunar calendar. The Obon festival is always held on the 15th of August, as it is based on the solar calendar.

One custom of the Tanabata Festival is the making of wish trees. People are encouraged to buy special strips of colorful paper on which to write wishes or poems, which are then folded and tied around bamboo trees. To ensure secrecy, the bamboo is placed into a nearby river or burned after the festival ends. Originally, these wishes were meant to be for increased abilities or talents, but today can be any wish deeply desired.

The Tanabata Festival is celebrated throughout Japan with a variety of carnivals and customs. Many regions hold decoration competitions or parades, and some even have beauty pageants to crown a Miss Tanabata. Special decorations like paper kimonos and cranes are hung to ask for specific blessings such as long life or good business. Colorful paper streamers decorate the streets in honor of the strips of cloth used by the weaver of the legend.

The holiday has spread in popularity beyond Japan, in particular to San Paulo, Brazil. This city, which has a large Japanese population, began honoring the festival in 1979. The Tanabata Festival is now held on the first weekend of July every year, and draws large crowds to its parades and cultural performances of dance and music.

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