The benchmark Nikkei 225 index lost 1.47 percent, or 341.69 points, to 22,932.84 in early trade, dropping further as the trading day progressed, while the broader Topix index was down 1.32 percent, or 24.56 points, at 1,839.64.
The dollar fetched 109.85 yen in early Asian trade, down from 110.18 yen in New York late Friday.
"Investor sentiment is turning negative following a drop in US shares... but bargain-hunting movement is also expected," Yoshihiro Ito, chief strategist at Okasan Online Securities, said in a commentary.
Panasonic was down 2.04 percent at 1,607.5 yen ahead of its earnings report for nine months to December later Monday.
Sony was up 1.20 percent at 5,550 yen, after the electronics giant said late Friday it now forecasts annual net profit of 480 billion yen, up from a previous forecast of 380 billion yen.
Honda was up 2.77 percent at 3,998 yen after the automaker said late Friday it expects net profit of one trillion yen ($9 billion), nearly double the previous forecast.
Its bigger rival Toyota was down 1.11 percent at 7,541 yen while Nissan was down 0.59 percent at 1,166 yen.