The International Olympic Committee (IOC) executive board approved moving the track cycling and mountain bike events to an existing venue in Izu.
Both were due to be in temporary venues - track cycling in the Ariake district and mountain biking at Sea Forest.
The changes to the programme will bring savings of £66m to the Games budget.
Earlier this year, the Japanese government scrapped plans for a £1.3bn Olympic stadium designed by British-Iraqi architect Zaha Hadid - the designer of the London 2012 aquatics centre.
A new plan costing about 60% of the original is expected to be agreed.
Sea Forest will still host the canoe sprint and rowing events, plus the cross-country and eventing elements of the equestrian programme.
An IOC statement said: "The athlete experience will be guaranteed, as all athletes and team officials whose events will be at Izu will have the option to stay in the main athletes' village before and after their competition.
"During the competitions, they will stay at a satellite village located close to the event venues."
International Cycling Union president Brian Cookson said his organisation had embraced the IOC's cost-cutting programme and the UCI would work with local authorities to build on the sport's legacy in Japan.
All sports have now been assigned venues for Tokyo 2020 except football, with a decision on that expected after next year's Rio Olympics.

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The Lowland League side take on East of Scotland League outfit Lothian Thistle Hutchison Vale for the right to host Celtic in the competition's last 16.
"I was sitting with my wee girl about to change her nappy. I just jumped up and went mad," said Russell.
Asked where the nappy ended up, he replied, "I don't know!"
The centre-back said he told his girlfriend, who was also watching the draw being made at Hampden, he was certain that when his own team and Vale's names were pulled out that Celtic's would follow.
However, the 26-year-old plumbing and heating engineer confessed he might struggle to focus on his job in the coming days.
"I think my boss will understand if I try to put my head down a toilet or something," he joked.
"I tried to go the gym. I was sitting on the bike just shaking my head."
Russell and his team-mates are determined to focus on their rearranged home game at K Park against Vale on 20 January, but the prospect of the Scottish champions playing at their tiny Lanarkshire ground inevitably seeps into the conversation.
So, can he imagine Celtic manager Ronny Deila watching him play from the stand?
"I'll put it out my head and make sure we get the win," he replied matter-of-factly.
"But after the game if he wants to talk contracts I'll be free!"
Sean Winter was also at home watching Monday's draw.
The former Stranraer midfielder told BBC Scotland: "It was me, my wee boy and my girlfriend and I just had a feeling. I've had a feeling for a few weeks it was going to be Celtic.
"I've played Rangers but I've never had a chance to play Celtic. As soon as I saw East Kilbride, I knew the next one was going to be Celtic. I was absolutely delighted.
"Whether it's us or Lothian Thistle, we have earned the right to be there. It's a fantastic thing for the town."
Fellow midfielder Craig Hastings, who works at the town's tax office, said: "I'm excited. I was sitting there with my wee maw, watching the telly, and she said, 'Who do you think it will be?'
"When Celtic came out she started screaming and then the phone was red hot, with my dad and my gran and everybody phoning me.
"Everyone is talking about it but we're not there yet. It's a great draw if we get there. We've got to prepare well."
Matt McGinley, a PE teacher at Calderglen High in the town, added: "It's the draw we wanted, the big-money tie, we are all absolutely buzzing."
"Bring them on. You want to test yourself against them the best, so why not?"
Cycling events at the Tokyo 2020 Olympics will be held 75 miles away from the city as part of a £1.2bn programme of cuts.
[NEXT_CONCEPT]
East Kilbride captain Barry Russell admits that seeing Celtic being drawn on TV as potential Scottish Cup opponents led to a domestic mishap.