The benchmark Nikkei 225 index lost 299.46 points to 14,460.61 in the first few minutes of trade.
Financial markets were weighed down as the US government was on the brink of shutting down Sunday after the House of Representatives approved a Republican bill seeking to delay President Barack Obama's health care law.
The dollar weakened to 97.84 yen in early Asian trade Monday from 98.24 yen in New York Friday afternoon. A stronger yen is a negative for shares of Japan's exporters.
Currency rates hardly moved after Japan released data showing its industrial production fell by a worse-than-expected 0.7 percent on month in August.