The benchmark Nikkei 225 index slid 0.28 percent, or 58.65 points, to close at 20,618.57 while the broader Topix index fell 0.61 percent, or 9.26 points, to 1,497.51.

"Today's decline was mainly due to the US loss," said Yoshihiro Okumura, general manager at Chibagin Asset Management.

On Wall Street, stocks slid further on Tuesday after President Donald Trump once again said he was not ready to reach a trade deal with China.

Brokers also said Tokyo investors cashed in on recent gains after Tokyo shares rose for a third straight session.

In Europe, Italian Prime Minister Giuseppe Conte resigned after lashing out at far-right Interior Minister Matteo Salvini for pursuing his own interests by pulling the plug on the governing coalition.

The move leaves the eurozone's third-largest economy in a political vacuum until President Sergio Mattarella decides whether to form a new coalition or call an election after talks with parties in the coming days.

"But the impact of Italy's political confusion is likely to be limited on the Japanese economy," Okumura said.

"Now all eyes are on Jackson Hole," Okumura added, referring to the central bank's annual symposium where US Federal Reserve Chairman Jerome Powell is to give a speech.

In Tokyo trading, IT investor SoftBank Group dropped 2.85 percent to 4,796 yen and Nissan lost 1.52 percent to 659.1 yen.

But Uniqlo chain operator Fast Retailing climbed 1.21 percent to 63,470 yen.

The dollar traded at 106.48 yen in Asian afternoon trade, against 106.23 yen in New York Tuesday afternoon.