Nikkei index has been tumbling due to concerns about the impact of the new coronavirus.
The key gauge lost about 500 points, or more than 2 percent at one stage on Monday morning.
Investors are worried about the spread of the new virus that first emerged in China and how it might affect the world economy.
Market players say concern is also rising that the manufacturing output of Japanese companies in China may stagnate.
The yen is higher against the dollar, around 109 yen level. Investors are buying the yen, which is seen as a relatively safe asset, and the stronger currency is also fueling the stock selloff.