In Java, the char keyword plays a crucial role in declaring variables of character type. A char variable is designed to hold a single character. For instance:

char letterA = 'A';

Moreover, the char keyword extends its utility to define the return type of a method:

public char getALetter() {
    return 'A';
}

By understanding the usage of the char keyword, you can efficiently work with individual characters in Java, enhancing the versatility of your code.