Tokyo's key Nikkei 225 index plunged more than two percent at the open on Tuesday, extending Wall Street falls on contagion fears from the expected collapse of debt-plagued Chinese property giant Evergrande.
The benchmark Nikkei 225 index dived 2.07 percent or 630.51 points to 29,869.54 in early trade, while the broader Topix index fell 2.21 percent or 46.36 points to 2,053.81.
Evergrande, one of China's biggest developers, is on the brink of collapse as it wallows in debts of more than $300 billion.
There are fears that Chinese authorities may not be able to contain the fallout of the firm's potentially disorderly collapse, which could affect many other companies and poses contagion risks, experts say.
"The Japanese market, which was closed on Monday, is expected to be dominated by sell-orders, with investors discouraged by the global market rout over the financial crisis at China's Evergrande," senior strategist Yoshihiro Ito of Okasan Online Securities said in a note.
"The market will continue to be volatile, with trading volume already expected to shrink" ahead of the US Federal Reserve's meeting this week, he added.
The dollar fetched 109.45 yen in early trade, against 109.38 yen in New York.
Among major shares in Tokyo, Nippon Steel was off 3.39 percent at 2,080 yen, Panasonic was down 2.19 percent at 1,382 yen, and Sony slipped 0.79 percent to 12,225 yen.
Honda was down 2.90 percent at 3,348 yen after it said its domestic output in Japan in the August-September period would be 40 percent of its initial plan due to parts shortages.
Shinsei Bank was down 0.73 percent at 1,882 yen and SBI Holdings was down 2.49 percent at 2,764 yen after the bank said it was introducing takeover defence measures against SBI's bid.
On Wall Street, the Dow ended down 1.8 percent at 33,970.47, the broad-based S&P finished down 1.7 percent and the tech-rich Nasdaq fell 2.2 percent.