A total of 14 films, both feature-length and shorts, were selected to screen in competition from 780 submissions.
Shot for a budget of $31,500 as a film school graduation project, Bare-assed Japan was the only entry in the line-up to have been shot on film (16mm).
The quirky ensemble comedy depicts the relationship between a father, his son and the girl he likes after they all move to a dilapidated farm in the countryside. The accolade also carried a cash prize of one million yen ($8,147). The film also won the award for Best Music.
The runner-up prize went to Yoshihito Ozaki's short film The Child (Sono Kodomo) while feature The Blue Monkey (Aoi Saru) received the Audience Award.
Hard-hitting feature This World Of Ours (Oretachi No Sekai), directed by Ryo Nakajima, grabbed three prizes including one of three Special Jury Prizes, the Imagica-sponsored Technical Prize and the Avex Entertainment-sponsored Entertainment Award. Short films Beyond Aomi's Second Ward (Aomi Ni-chome-saki) and Ki-Ka each won Special Jury Prizes. Gaku Yamaguchi's Height won prizes from sponsors TBS and GyaO.
The 2007 jury included actor Tadanobu Asano, veteran genre film director Noribumi Suzuki, producer Hiroyuki Negishi, artist Tatsuya Ishii and manga artist Sakumi Yoshino.
This year marked the 29th edition of PFF, seen as one of the country's leading independent film festivals and the place where directors such as Lee Sang-il (Hula Girls), Nobuhiro Suwa (H Story) and Yoshimitsu Morita, who is currently directing a remake of Akira Kurosawa's Sanjuro, got their starts.
PFF is unique for its scholarship programme, eligible to filmmakers who win prizes in the competition. Launched in 1984, the programme funds one 35mm feature film per year. Izuru Kumasaka's Park And Love Hotel screened at this year's edition.
The festival also mounted an 11-film retrospective of late director Robert Altman's films, which will continue to run into August.