The Nikkei index fell 1.49 percent or 142.66 points to 9,413.99 at the opening bell. The Topix index of all first section shares on the Tokyo Stock Exchange lost 1.35 percent or 11.27 points to 825.07.
Tokyo shares followed a plunge on Wall Street overnight after Standard & Poor's revised its outlook on America's sovereign debt to "negative" from "stable" -- casting uncertainty on its top-line AAA grading.
Voicing strong doubts over the ability of battling Republicans and Democrats to agree a credible plan on cutting the fiscal deficit, S&P gave the
country until 2013 to act or face losing its coveted rating.
"S&P's cut reflects US deficit concerns so that, in itself, is not hugely negative for Japan stocks," Kazuhiro Takahashi, general manager at Daiwa Securities, told Dow Jones Newswires.
"But there are concerns about the yen's direction and the growing uncertainty on corporate earnings," he said, citing the negative impact of Japan's disaster on Texas Instruments' earnings.
The yen has been the beneficiary in recent sessions from concerns about the economies underpinning the euro and the dollar.
As well as the new US debt warning, resurfacing jitters over Greece's liabilities have turned up the heat on Europe's simmering debt crisis amid speculation one of the 17-nation eurozone's most troubled economies will have to restructure its debt.
Big exporters were lower on expectations a stronger yen will hit repatriated earnings.
Machinery maker Fanuc was down 1.98 percent at 12,860 and Toyota Motor was off 2.79 percent at 3,135. Honda was down 0.97 percent at 2,952. Nissan was off 1.25 percent at 706.
With Japanese companies about to issue earnings reports that will show how the March 11 disasters have impacted forecasts, uncertainty has limited risk taking on the bourse, compounded by the ongoing nuclear crisis.
Shares of Tokyo Electric Power, operator of the stricken Fukushima Daiichi plant whose reactor cooling systems were crippled by the tsunami triggering the worst atomic crisis since Chernobyl were down 7.92 percent at 430.