Tokyo's key Nikkei index plunged more than 3.2 percent on Monday, tracking losses on Wall Street as investors digested Federal Reserve messaging on more restrictive monetary policy.
The benchmark Nikkei 225 index fell 3.29 percent, or 953.15 points, to close at 28,010.93 while the broader Topix index lost 2.42 percent, or 47.11 points, to 1,899.45.
"Growing concerns over a possible shift of the US monetary policy poured cold water on investor sentiment," Yoshihiro Okumura of Chibagin Asset Management told AFP.
"Trading is expected to remain volatile for now, which will make investors nervous," Okumura said.
On Wall Street, "reaction to last week's hawkish FOMC meeting continued," said Rodrigo Catril, senior strategist at National Australia Bank, in a commentary.
Expectations of a Fed rate hike sent US Treasury yields higher and pushed down stocks and the dollar.
Tokyo and US investors were reacting to comments by St Louis Fed President Jim Bullard in which he revealed himself as one of the seven FOMC members pencilling a rate hike by the end of 2022.
"Bullard is not a voting member this year and has a history of being very dovish and very hawkish, still, given market sensitivity, Bullard's interview contributed to" volatility, Catril said.
The dollar fetched 109.81 yen in Asian afternoon trade, against 110.20 yen in New York and 110.07 yen in Tokyo on Friday.