Japanese shares closed 2.08% down after Wall Street tumbled overnight as a fresh spike in crude oil prices hit sentiment, dealers said.
The benchmark Nikkei-225 index lost 294.88 points to 13,888.60, ending below the key 14,000 points level.
"Investors are selling following falls in the US and European markets," said Daisuke Uno, chief market strategist of Sumitomo Mitsui Banking Corp. "The Japanese stock market has been volatile recently." Exporters were weaker on profit-taking and worries about the impact of the US economic slowdown on their earnings.
Toyota Motor lost 2.7% and Sony fell 2.8%.
Bank shares were pressured by fresh worries about the fallout from the US subprime loan crisis. Mizuho Financial Group ended down 3.1%.
Hong Kong share prices closed down 1.3%. The Hang Seng Index ended 303.74 points at 23,023.86.
Stocks fell across the board with blue chip infrastructure group Cheung Kong one of the worst hit, falling 2.35%. Shares in Hong Kong carrier Cathay Pacific fell on continuing worries about the high cost of fuel.
Australian shares closed 2.5% lower. The benchmark SP/ASX200 index fell 138.1 points to 5329.2, while the broader All Ordinaries lost 128.7 points to 5433.2.
ABN Amro Morgans private client adviser Peter Knight said stocks exposed to high oil prices or the U.S. economy lost ground and the major banks were also weaker.
Chinese stocks closed 2.21% lower as the expected slowdown in May inflation failed to boost sentiment after recent steep falls. The benchmark Shanghai Composite Index, which covers A and B shares, closed down 66.71 points at 2,957.53.
Taiwan shares closed 3.4% lower. The weighted index closed down 283.28 points at 8,062.31.
South Korean share prices fell 2.4% to a 10-week low after the central bank froze its key interest rate, warning that the risk of inflation outweighs that of an economic slowdown. The KOSPI index ended down 42.31 points at 1,739.36, the weakest level since April 1 when it closed at 1,702.25.
Singapore share prices closed 0.87% lower in subdued trading which saw the main Straits Times Index dip below the psychologically important 3,000 points level. The blue chip STI closed 26.62 points lower at 3,020.15.
Malaysian share prices closed down 0.3% amid a decline on regional markets and local concern over rising inflation. The Kuala Lumpur Composite Index fell 3.74 points to 1225.54.
Thai shares closed 0.11% lower as the market fell in line with a sell-off across Asia.
The Stock Exchange of Thailand (SET) composite index slipped 0.86 points to close at 790.80, while the blue-chip SET 50 index edged down 0.10 points to 566.04.
Indonesian shares closed 1.4% higher. The Jakarta Composite Index ended up 34.22 points at 2,409.01.
Philippine share prices closed 1.3% lower. The composite index lost 34.39 points to the day's low of 2,544.89.
New Zealand share prices closed 1.38% lower. The NZX-50 gross index fell 48.21 points to 3,439.22.
Indian shares closed 0.43% up in volatile trade. The benchmark Mumbai 30-share Sensex index rose 64.88 points to 15,250.2, recovering from the day's low of 14,747.99.
"The markets were negative on the repo rate hike but recovered as positive industrial production data come through," said Advait Date, a dealer with brokerage BHH Securities.
The Reserve Bank of India said it was raising its repo rate, at which commercial banks borrow funds from the central bank, from 7.75% effective immediately.