Panetta's trip to Asia coincides with an emotionally charged feud between Beijing and Tokyo over disputed islands in the East China Sea, with thousands of Chinese demonstrating against Japan over the weekend.
The Pentagon chief, who previously served as director of the CIA, first met Foreign Minister Koichiro Gemba on Monday and was due to hold a longer session with his counterpart, Defence Minister Satoshi Morimoto.
The United States has steered clear of explicitly taking sides on territorial questions but it remained unclear what role Washington could play in the dispute, given the troubled history between Japan and China and America's uneasy relations with Beijing.
Panetta's week-long Asian tour includes visits to Beijing and Auckland but his schedule originally did not include a stop in Tokyo. The row over the archipelago likely prompted the change in his itinerary, analysts said.
Before landing in Tokyo on Sunday evening, Panetta warned that provocations over an array of territorial disputes in the East China Sea and the South China Sea could blow up into a war unless governments exercised more restraint.
"I am concerned that when these countries engage in provocations of one kind or another over these various islands, that it raises the possibility that a misjudgement on one side or the other could result in violence, and could result in conflict," Panetta told reporters travelling on his plane.
"And that conflict would then have the potential of expanding."
Japan and China, Asia's two largest economies, are at loggerheads over the archipelago in the East China Sea administered by Tokyo under the name Senkaku and claimed by China under the name Diaoyu.
Last week, Japan announced it had nationalised three of the islands in the chain, triggering angry protests in China. Tokyo already owns another and leases the fifth.
The uninhabited islands lie along important sea lanes and the seabed nearby is thought to harbour valuable mineral resources.
Panetta's talks in Tokyo were also expected to focus on US plans to deploy a dozen Osprey tilt-rotor aircraft to a base on Okinawa, amid strong opposition to the move on the southern island.
US officials are trying to reassure the Japanese about the safety of the Osprey, which can take off like a helicopter and then rotate its engines to allow it to fly like a turboprop plane.