The Nikkei 225 index lost 251.99 points to 15,118.27 in the first few minutes of trade.
News of the crash sent US stocks tumbling and the yen rallying, giving a double whammy for Japanese stocks.
The Dow Jones Industrial Average sank 0.94 percent to 16,976.81 on Thursday, retreating from Wednesday’s record close.
Kiev says the commercial jetliner was shot down, heightening tensions in the months-old conflict and shaking markets.
The yen, often considered a safe haven in times of turmoil, has strengthened since the news of the Malaysian plane crash.
The dollar was at 101.20 yen in early Asian trade Friday, hardly changed from 101.17 yen in New York Thursday afternoon but down from 101.51 yen in Tokyo earlier Thursday.
The euro bought 136.77 yen and $1.3514 from 136.83 yen and $1.3525 in US trade.