The benchmark Nikkei index at the Tokyo Stock Exchange fell 145.00 points to close at 9,859.20, off Monday's close above 10,000 points.
The Topix index of all first section shares was down 1.05 percent or 9.05 points at 856.50.
Japanese markets were closed on Tuesday, Wednesday and Thursday for the Golden Week spring holiday.
Weak data on Thursday sparked concerns over the US economy, sending the dollar below 80 yen for the first time since March 18 when Group of Seven economic powers intervened to stem the yen's post-earthquake strength.
It rebounded to 80.47 yen in Tokyo afternoon trade.
Japanese Finance Minister Yoshihiko Noda told reporters Friday he would "closely monitor" the currency market, stopping short of threatening intervention.
Officials stressed the movements were a case of dollar weakness, as opposed to the strength of the Japanese unit -- which in the immediate aftermath of the March 11 earthquake prompted the concerted G7 move.
Japanese authorities are unlikely to intervene unless the Nikkei falls below 9,000, says Masafumi Yamamoto, chief FX strategist at Barclays Bank.
A statement from the president of the European Central Bank Jean-Claude Trichet indicating the bank would not anytime soon hike interest rates also prompted concerns about the yen's strength against the euro.
Toyota declined 2.43 percent to 3,210 yen and Nissan fell 2.26 percent to 777 yen while Honda plunged 4.65 percent to 3,075 yen.
Sony dropped 2.80 percent after it reported that cyber assaults on its online videogame network were broader than first thought, with intruders possibly making off with credit and debit card data.
Its shares recovered some ground to close down 2.33 percent at 2,262 yen.
Sony CEO Howard Stringer apologised to consumers on a blog post late Thursday. Sentiment also deteriorated following a sharp fall in crude and gold prices, compounded by a weaker dollar, Yumi Nishimura, senior market analyst at Daiwa Securities, told Dow Jones Newswires.
The oil sector was lower. JX Holdings fell 3.39 percent to 542 yen and Inpex lost 6.16 percent to 563,000 yen.
Trading houses were also hurt. Mitsubishi Corporation dropped 1.41 percent to 2,175 yen, Mitsui & Co was down 2.95 percent to 1,412 yen and Marubeni fell 2.01 percent to 583 yen.
Shares in Tokyo Electric Power gained 6.80 percent to 455 yen following news Thursday that ventilators were switched on inside one of the reactor buildings at its Fukushima nuclear plant.