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Iwai was born in Sendai, Miyagi, Japan. He attended Yokohama National University, graduating in 1987.
In 1988 he started out in the Japanese entertainment industry by directing TV dramas and music videos. Then, in 1993, his TV drama, Fireworks, brought him critical praise and the Directors Guild of Japan New Directors Award for his portrayal of a group of children in the town of Iioka.
In 1995 he went on to start his career in feature films, starting with the box-office hit Love Letter, in which he cast pop singer Miho Nakayama in dual roles. Love Letter also launched the movie career of Miki Sakai who won a Japanese Academy Award as ‘Newcomer of the Year’ for her portrayal of Itsuki Fujii as a young girl.
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