Starting with Rashomon, Kurosawa's productions had become increasingly large in scope and so had the director's budgets. Toho, concerned about this development, suggested that he might help finance his own works, therefore making the studio's potential losses smaller, while in turn allowing himself more artistic freedom as co-producer. Kurosawa agreed, and the Kurosawa Production Company was established in April 1959, with Toho as majority shareholder.
Despite risking his own money, Kurosawa chose a story that was more directly critical of the Japanese business and political elites than any previous work. The Bad Sleep Well, based on a script by Kurosawa's nephew Mike Inoue, is a revenge drama about a young man who is able to infiltrate the hierarchy of a corrupt Japanese company with the intention of exposing the men responsible for his father's death. Its theme proved topical: while the film was in production, mass demonstrations were held against the new U.S.-Japan Security treaty, which was seen by many Japanese, particularly the young, as threatening the country's democracy by giving too much power to corporations and politicians. The film opened in September 1960 to positive critical reaction and modest box office success. The 25-minute opening sequence depicting a corporate wedding reception is widely regarded as one of Kurosawa's most skillfully executed set pieces, but the remainder of the film is often perceived as disappointing by comparison. The movie has also been criticized for employing the conventional Kurosawan hero to combat a social evil that cannot be resolved through the actions of individuals, however courageous or cunning.
Yojimbo (The Bodyguard), Kurosawa Production's second film, centers on a masterless samurai, Sanjuro, who strolls into a 19th-century town ruled by two opposing violent factions and provokes them into destroying each other. The director used this work to play with many genre conventions, particularly the Western, while at the same time offering an unprecedentedly (for the Japanese screen) graphic portrayal of violence. Some commentators have seen the Sanjuro character in this film as a fantasy figure who magically reverses the historical triumph of the corrupt merchant class over the samurai class. Featuring Tatsuya Nakadai in his first major role in a Kurosawa movie, and with innovative photography by Kazuo Miyagawa (who shot Rashomon) and Takao Saito, the film premiered in April 1961 and was a critically and commercially successful venture, earning more than any previous Kurosawa film. The movie and its blackly comic tone were also widely imitated abroad. Sergio Leone's A Fistful of Dollars was a virtual (unauthorized) scene-by-scene remake with Toho filing a lawsuit on Kurosawa's behalf and prevailing.
Following the success of Yojimbo, Kurosawa found himself under pressure from Toho to create a sequel. Kurosawa turned to a script he had written before Yojimbo, reworking it to include the hero of his previous film. Sanjuro was the first of three Kurosawa films to be adapted from the work of the writer Shgor Yamamoto (the others would be Red Beard and Dodeskaden). It is lighter in tone and closer to a conventional period film than Yojimbo, though its story of a power struggle within a samurai clan is portrayed with strongly comic undertones. The film opened on January 1, 1962, quickly surpassing Yojimbo's box office success and garnering positive reviews.
Kurosawa had meanwhile instructed Toho to purchase the film rights to King's Ransom, a novel about a kidnapping written by American author and screenwriter Evan Hunter, under his pseudonym of Ed McBain, as one of his 87th Precinct series of crime books. The director intended to create a work condemning kidnapping, which he considered one of the very worst crimes. The suspense film, titled High and Low, was shot during the latter half of 1962 and released in March 1963. It broke Kurosawa's box office record (the third film in a row to do so), became the highest grossing Japanese film of the year, and won glowing reviews. However, his triumph was somewhat tarnished when, ironically, the film was blamed for a wave of kidnappings which occurred in Japan about this time (he himself received kidnapping threats directed at his young daughter, Kazuko). High and Low is considered by many commentators to be among the director's strongest works.
Kurosawa quickly moved on to his next project, Red Beard. Based on a short story collection by Shgor Yamamoto and incorporating elements from Dostoyevsky's novel The Insulted and Injured, it is a period film, set in a mid-nineteenth century clinic for the poor, in which Kurosawa's humanist themes receive perhaps their fullest statement. A conceited and materialistic, foreign-trained young doctor, Yasumoto, is forced to become an intern at the clinic under the stern tutelage of Doctor Niide, known as "Akahige" ("Red Beard"), played by Mifune. Although he resists Red Beard initially, Yasumoto comes to admire his wisdom and courage, and to perceive the patients at the clinic, whom he at first despised, as worthy of compassion and dignity.
Yz Kayama, who plays Yasumoto, was an extremely popular film and music star at the time, particularly for his "Young Guy" (Wakadaish) series of musical comedies, so signing him to appear in the film virtually guaranteed Kurosawa strong box-office. The shoot, the filmmaker's longest ever, lasted well over a year (after five months of pre-production), and wrapped in spring 1965, leaving the director, his crew and his actors exhausted. Red Beard premiered in April 1965, becoming the year's highest-grossing Japanese production and the third (and last) Kurosawa film to top the prestigious Kinema Jumpo yearly critics poll. It remains one of Kurosawa's best-known and most-loved works in his native country. Outside Japan, critics have been much more divided. Most commentators concede its technical merits and some praise it as among Kurosawa's best, while others insist that it lacks complexity and genuine narrative power, with still others claiming that it represents a retreat from the artist's previous commitment to social and political change.
The film marked something of an end of an era for its creator. The director himself recognized this at the time of its release, telling critic Donald Richie that a cycle of some kind had just come to an end and that his future films and production methods would be different. His prediction proved quite accurate. Beginning in the late 1950s, television began increasingly to dominate the leisure time of the formerly large and loyal Japanese cinema audience. And as film company revenues dropped, so did their appetite for riskparticularly the risk represented by Kurosawa's costly production methods.
Red Beard also marked the midway point, chronologically, in the artist's career. During his previous twenty-nine years in the film industry (which includes his five years as assistant director), he had directed twenty-three films, while during the remaining twenty-eight years, for many and complex reasons, he would complete only seven more. Also, for reasons never adequately explained, Red Beard would be his final film starring Toshiro Mifune. Yu Fujiki, an actor who worked on The Lower Depths, observed, regarding the closeness of the two men on the set, "Mr. Kurosawa's heart was in Mr. Mifune's body." Donald Richie has described the rapport between them as a unique "symbiosis".