The 225-issue Nikkei Stock Average finished 747.66 points, or 2.53 percent, lower from Thursday at 28,751.62, its lowest close since Oct. 25.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange closed 40.71 points, or 2.01 percent, lower at 1,984.98.
Trading volume on the main section jumped to 1,302.90 million shares from Thursday's 959.84 million shares.
As the yen was seen as a safe-haven asset, the U.S. dollar against the Japanese yen fell to the upper 114 yen range along with a sharp fall in the stock market.
Tokyo stocks opened low from the outset and extended losses throughout the morning. The decline accelerated in the afternoon, with the Nikkei benchmark dropping almost 900 points, or more than 3 percent, to fall below the 29,000 mark amid the stronger yen and weak performance in other Asian markets.
Masahiro Ichikawa, the chief market strategist at Sumitomo Mitsui DS Asset Management Co., said, "Reports of the new COVID-19 variant were a risk factor to the market as they heightened a sense of uncertainty and raised worries of a potential resurgence of infections," adding that a slump in U.S. stock futures also dragged down the Tokyo market.
Market participants are worrying that the new variant confirmed in South Africa may be highly contagious, and the efficacy of COVID-19 vaccines against new variants is being questioned due to the nature of its mutations.
Six African countries, including South Africa, were added to Britain's red list of travel restrictions on Thursday as a countermeasure against the new variant's potential spread.
Maki Sawada, a strategist at Nomura Securities Co.'s investment content department, said, "As European countries implement lockdowns and restrict movements due to a surge in infections in the region, reports of a new variant served as an additional negative factor and deepened uncertainty over the global economic recovery."
By the close of play, every sector lost ground with air transportation, real estate, and land transportation firms leading the downtrend. Declining issues outnumbered advancing ones 1,992 to 152 on the First Section, while 39 finished unchanged.
The rising concerns over the new South African variant were directly reflected in the air and land transportation firms, with ANA Holdings dropping 4.5 percent, Japan Airlines tumbling 6.5 percent, and East Japan Railway ending down 2.4 percent.
In addition, travel agency H.I.S. also faced selling, plunging 7.3 percent on the variant reports.
Among exporters that were lower due to stronger yen, electronic manufacturers Canon and Panasonic ended down 2.0 percent and 2.8 percent, respectively. Automakers Mazda Motor dropped 2.7 percent, and Nissan Motor close down 1.6 percent.