By Agence France-Presse
The Nikkei 225 index was down 3.47 percent, or 771.92 points, at 21,497.96 in early trade, while the broader Topix index was down 3.06 or 51.09 points at 1,620.86.
"The Tokyo market is being hit by the plunge in US shares, and news that Apple's iPhone sales are not going very well is also proving a blow," Hideyuki Suzuki, head of investment information department at SBI Securities, told AFP.
"The Tokyo market is hitting the second lowest level since October 26, when the Nikkei index dipped below 21,000," he noted, adding that share prices may bottom out.
The dollar fetched 113.63 yen in early Asian trade, down from 113.85 yen in New York late Monday.
In Tokyo, Apple's parts supplier Murata Mfg dropped 6.55 percent to 16,680 yen, while other electronic parts makers also plunged, with TDK dropping 7.10 percent to 8,890 yen and Alps Electric plummeting 8.37 percent to 2,441 yen.
US stocks crumbled on Monday, as a sell-off initially sparked by fears of weakening demand for Apple's iPhone spread to the rest of the market with the Dow ending down 2.3 percent at 25,387.18.