The 225-issue Nikkei Stock Average dropped 463.65 points, or 1.68 percent, from Wednesday to close the day at 27,199.74.
The broader Topix index, meanwhile, lost 25.06 points, or 1.29 percent, to finish at 1,915.40.
Markets here were closed on Thursday for a national holiday.
Local brokers said that a wide range of issues came under pressure following the Fed's latest 0.75-percentage point interest rate hike, with Fed chair Jerome Powell saying it is "very premature to think about a pause in rate hikes," triggering concerns such hefty hikes could continue at more aggressive levels into next year.
"A situation where there's no clarity on the terminal rate is going to keep markets on edge," Masahiro Yamaguchi, head of investment research at SMBC Trust Bank, was quoted as saying.
"It's difficult for stocks to rise amid expectations for higher U.S. rates, and we're in a period of unstable market movement, with investors cautious about downside risks," Yamaguchi said.
By the close of play, glass and ceramic product, farm and fishery, and precision instrument issues comprised those that declined the most.
Technology issues followed their U.S. counterparts on the Nasdaq lower, with chipmaker Screen Holdings losing 2.5 percent, while semiconductor equipment maker Tokyo Electron ended the day down 2.4 percent.
Optical equipment maker Olympus, meanwhile, dropped 3.5 percent by the close.
Online company Z Holdings was a notable loser, tumbling 14.2 percent after announcing subpar financial results.
Conversely, Mitsubishi Motors surged 18 percent, after the automaker upwardly revised its earnings outlook.
Issues that fell outpaced those that rose by 1,437 to 351, while 49 ended the day unchanged.
On the Prime Market, 1,639.16 million shares changed hands, rising from Wednesday's volume of 1,430.69 million shares.
The turnover on the final trading day of the week came to 3,703.60 billion yen (25.09 billion U.S. dollars).
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