The company said on Sunday that about 4 percent of the aluminium and copper products that it shipped from September 2016 to August 2017 were falsely labelled as meeting the specifications requested by customers.
While Kobe Steel said the products were delivered to more than 200 companies, it didn't disclose their names.
"The scope of it is in some ways is really quite breathtaking", said Tim McDonald from the BBC.
Analysts say the development further tarnishes the reputation of Japan's globe-trotting manufacturers, long celebrated for their high-quality products.
Automaker Nissan Motor Co Ltd this month announced a recall of more than 1 million vehicles after admitting that workers without proper certification routinely conducted the final inspections for new vehicles to be sold in the domestic market. And Toshiba's Westinghouse Electric Co. Some Kobe products were used in regional jets and rockets produced by Mitsubishi Heavy Industries.
Aluminium castings, forgings and flat-rolled items, along with copper strips and tubes were among the products affected, the company said in a statement.
Kobe said that at present there was no evidence that the "nonconforming" products would compromise safety.
Doors and hoods are also affected at Nissan, a spokesman confirmed. Toyota said the affected material had been used in auto doors and hoods of vehicles made in Japan. "At the moment, the impact is unclear but if this leads to recalls, the cost would be huge".
Railway companies including East Japan Railway Co. and Central Japan Railway Co. said that the problematic products had also been used in some of the Shinkansen bullet trains. Hitachi Ltd., which used Kobe products in trains exported to the United Kingdom, said it's found no safety concerns.
"It's so regrettable that such things happened to companies that represent (the image of) Japan", he said, adding that manufacturers in question should find out the cause of such misconducts and make sure they never happen again.
"Aluminum is a strategic business for Kobe Steel", said Irisawa at Tachibana Securities. "We recognize this as an improper act that will shake fair trading", Yasuji Komiyama, director at the metal industries division, told reporters in Tokyo.
The false data supplied to automakers was meant to make metals look like they met clients' quality standards.
Japan's Nikkei share average edged up in choppy trade on Tuesday after a three-day weekend as the weak yen supported sentiment, but Kobe Steel's shares were set to plunge after it said it had fabricated data.
In other product-related cases, Takata pleaded guilty in the U.S.in February to one count of wire fraud for misleading automakers about the safety of its air bags.
Kobe Steel has said the impact of the data falsification on its earnings is still unknown.