The benchmark Nikkei index fell 56.71 points to 10,041.01 by the break. The Topix index of all first-section issues on the Tokyo Stock Exchange was down 8.01 points, or 0.92 percent, to 858.19.
Investors remained cautious over the stalled US debt ceiling talks, Kazuhiro Takahashi, general manager of investment strategy and research at Daiwa Securities, told Dow Jones Newswires.
US stocks fell on Tuesday as the deadline for raising the government's debt ceiling stood just one week away, with no signs of a resolution to the bitter standoff.
The Dow Jones Industrial Average dropped 91.50 points (0.73 percent) to close at 12,501.30.
The yen's strength against the US dollar amid the US political impasse fuelled selling pressure further on Japanese shares, brokers said. A strong yen erodes exporters' overseas earnings.
The dollar bought 77.90 yen in Tokyo, compared with 77.94 yen in New York, at one point falling to a fresh four-month low of 77.82.
But selling was limited as market participants were on the sidelines ahead of a batch of domestic corporate earnings on Thursday and Friday, brokers said.
Toshiba fell 1.90 percent to 411 on a Nikkei report the company is expected to post lower-than-expected operating profit.
Earnings from machinery maker Fanuc, due during market hours, would be closely watched, said dealers.
Tokyo Electric Power dropped 8.78 percent to 467 yen despite a bill aimed at keeping the embattled utility solvent gaining approval from a Japanese parliamentary committee Tuesday, paving its way for later passage.
"The bill is written in a manner that can be interpreted in any number of ways. In the end, it will come down to a political decision" on whether shareholders will bear the brunt of the firm's liabilities, said Monex market analyst Toshiyuki Kanayama.
Copyright AFP (Agence France-Presse), 2011