Muto headlined Final Power Hall in Tokyo Dome as he unsuccessfully challenged Kensuke Sasaki for the IWGP Heavyweight Championship. Muto and Chono were forced to vacate the IWGP Tag Team Championship on April 21, when Muto injured his knees, as his years of using the moonsault press were finally catching up to him. During this time, he took a hiatus from action, returning just before the 1998 G1 Climax, from which he was eliminated by Genichiro Tenryu in the first round. Despite his return, Muto was plagued by this nagging injury, fighting through his pain throughout the rest of 1998 and all of 1999. Towards the end of 1998, Muto took the leadership of nWo Japan, after Chono suffered a neck injury and was out of action, turning the nWo into a face stable. Muto would then team with teammate Satoshi Kojima as they won the Super Grade Tag League by defeating Shinya Hashimoto and Tatsumi Fujinami in the final on December 6. At Wrestling World on January 4, 1999, Muto defeated one of Chono's right-hand men, Scott Norton to win his third IWGP Heavyweight Championship. The following month, Masahiro Chono returned to NJPW and disagreed with Muto over Muto's philosophy and leadership of the nWo Japan, thus leaving the group and Muto feuded with Chono for the name of the nWo, which evolved into a war between the nWo, led by Muto, Hiroyoshi Tenzan, and Satoshi Kojima and Chono's new Team 2000 unit, with himself, Don Frye, Super J, and others from the old generation of the nWo. Muto successfully defended the IWGP Heavyweight Championship against Kensuke Sasaki at St. Valentine's Day Massacre, Team 2000 member Don Frye at Strong Style Symphony, Genichiro Tenryu on May 5 and Satoshi Kojima on July 20. In August, Muto entered the G1 Climax, where he lost only one match to Tatsumi Fujinami while winning the rest of his matches in the block thus qualifying to the final against Manabu Nakanishi, which he lost, leading to a match between Muto and Nakanishi for the IWGP Heavyweight Championship at Final Dome, where Muto retained. Muto revived Great Muta character at Jingu Climax on August 28 for a No Rope Explosive Barbed Wire Barricade Explosive Land Mine Double Hell Deathmatch against Great Nita, which Muta won. The following month, Muto entered the Super Grade Tag League with stablemate Scott Norton, which they won by defeating