The Great Kanto Earthquake occurred on September 1st, 1923 and inflicted serious damage on Yokohama City as well as Tokyo City. For example, about 90% of the factories in Yokohama City were burnt down. However, these manufacturing industries appear to have recovered from the damage swiftly. This paper investigates the existence of creative destruction due to the Great Kanto Earthquake. Using firm-level data on capital (horsepower of motors) before and after the earthquake, we find substantial creative destruction in Yokohama city. Larger firms tend to increase their capital more in seriously damaged areas.