Japanese era name (年号, nengō, lit. year name) is a common calendar scheme used in Japan to count years. For example, 2005 is Heisei 17.
Like similar systems in East Asia, the era name system was originally derived from Chinese Imperial practice, although the Japanese system is independent from the Chinese or Korean calendar systems. Unlike other similar systems, the Japanese era name is still in use. Government offices usually require era names and years for official papers.
Sometimes an era name is expressed with the first letter of the romanized name. For example, S55 means Showa 55. At 64 years, Showa is the longest era to date.
Modern era names
Since the ascension of the Meiji Emperor it has been the practice to change era names only upon imperial succession. This practice became law in 1979. Upon his death, an emperor is thereafter referred to with the name of the era marked by their reign. (For example, the 124th Emperor, Hirohito, referred to during his life as Tennō Heika, is posthumously known as the Showa Emperor.)
In modern practice, the first year of a reign (元年 gannen) starts immediately upon the emperor's ascension to the throne, but always ends on December 31st. Subsequent years follow the Western calendar. Consequently, 1989 is known as both "Showa 64" and "Heisei Gannen", although technically Showa 64 ended on January 7th with Hirohito's death.
Note that it is protocol in Japan that the reigning emperor is almost always referred to as Tennō Heika (天皇陛下, His Majesty the Emperor). Less frequently, the more informal Kinjō Tennō (今上天皇, current emperor) is used. The use of the emperor's given name is extremely rare in Japanese even today. To call the current emperor by the current era name Heisei, even in English, would be a faux pas, as it is and will be his posthumous name. These conventions are the source of great confusion not only in other languages, but also for the Japanese themselves.
Historic era names
Historically, prior to the Meiji Restoration, era names were changed on many different occasions including celebrations, major political incidents, and natural disasters, but emperors never posthumously took the name of an era. Incidentally, on modern official papers, those born prior to the Meiji era wrote not the era name in which they were born, but Edo period (No one born in that time period, over 130 years ago, is alive now).