Tanabata is a Japanese tradition wherein people write their wishes on Tanzaku Papers (colorful, small strips of papers) and hang them on bamboo branches. People also decorate bamboo branches with various kinds of paper decorations and place them outside their houses. The most common tanabata decorations are colorful streamers. Streamers are said to symbolize the weaving of threads. Other tanabata decorations are toami (casting net), which means good luck for fishing and farming and kinchaku (hand bag), which means wealth.
Tanabata originated more than 2,000 years ago with an old Chinese tale called Kikkoden. Once there was a weaver princess named Orihime and a cow herder prince named Hikoboshi living in space. After they got together, they were playing all the time and forgot about their jobs. The king was angry at them and separated them on opposite sides of the Amanogawa River (Milky Way). The king allowed them to meet only once a year on July 7th. This is why tanabata is also known as the star festival. It's believed that Orihime and Hikoboshi can't see each other if July 7th is rainy, so people pray for good weather and also make wishes for themselves.
Depending on regions, tanabata is celebrated on July 7th or August 7th (which is near July 7th on the lunar calendar). If you are in Japan around these days, stop by a tanabata festival near your destinations. Many cities and towns hold tanabata festivals and have tanabata displays, decorating the main streets. It's fun to walk through the long streamers on the street. In some regions, people light lanterns and float them on the river, or float bamboo leaves on the river.
Tanabata festivals in Sendai-city, Miyagi Prefecture and Hiratsuka-city, Kanagawa Prefecture are particularly well-known. Huge Tanabata decorations fill the main streets in these cities and attract millions of visitors every year. (Tanabata Intro from GoJapan.about.com)