Aim The aim of the study was to establish whether there are differences in long‐term care (LTC) provision with regard to needs between rural and urban municipalities in Japan and Sweden, and we propose possible causes for these differences. Methods Using comparable datasets from Japan (n = 20 699) and Sweden (n = 17 576), the care systems have been compared on an individual level. The datasets each contain information from nine large urban, midsize urban and rural municipalities regarding disability levels and the LTC services provided. Results LTC users in the large urban municipalities in both countries are, on average, less disabled than users in the midsize urban and rural municipalities. In both countries, per capita costs for LTC were lower in the large urban municipalities than in the rural municipalities (10% and 14%, respectively). However, when standardized for the level of disability, the per capita costs were higher in the large urban municipalities (4% in both cases). Multivariate analysis showed that there were significant per capita cost differences between the large urban and the rural municipalities in Japan. In Sweden, there were no significant per capita cost differences between the different types of municipality when age, sex and disability differences were accounted for. Conclusion The findings seem to reflect the effect of differences in household structure, which in the large urban municipalities result in less access to informal LTC, thereby influencing the propensity to apply for formal, public LTC – especially for those with lesser needs. In Japan, where the number of extended family households is decreasing, this gives an idea of the future challenges facing LTC provision. Geriatr Gerontol Int 2014; 14: 315–327..