The Nikkei share average fell 2.3 percent to 16,562.55, the biggest daily drop since May 2.
Hong Kong shares rose slightly on Thursday, as investors continued to worry about China's economic health and the impact of a looming U.S. interest rate hike.
The Hang Seng index rose 0.5 percent, to 20,859.22, while the China Enterprises Index gained 0.6 percent, to 8,756.38points.
China stocks rose slightly on Thursday but gains were capped by concerns about weak factory activity readings, which suggest the world's second-largest economy is still struggling to get traction.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 0.2 percent to 3,167.10 points, while the Shanghai Composite Index gained 0.4 percent to 2,925.23 points.
Reference: Reuters