New Zealand pride themselves on playing a fast, energetic style, but for too much of the game the momentum was with Japan.
"The biggest thing today was we didn't perform at all as a team," captain Stacey Michelsen said.
"We certainly had enough opportunities going forward but didn't do enough in the attacking circle. We didn't outlet well enough out of the back and weren't clinical enough in the circle."
Japan went ahead with a firm shot from Shihori Oikawa four minutes after halftime.
Experienced midfielder Anita McLaren had been dispossessed in midfield, a silly penalty corner had been conceded directly from that and Oikawa cashed in.
They doubled the lead after a bad blunder from defender Brooke Neal, who had otherwise done some strong work at the back. Her attempted lifted clearance was intercepted and the ball reached attacker Minami Shimizu who scored with 12 minutes left.
New Zealand had scoring chances but weren't sharp enough.
Midfielder Amy Robinson, who got in a power of running, was through on her own after a defensive slipup but couldn't capitalise; Sam Harrison shot over the bar, and across the face of the goal after diving desperately to get her stick on a clever McLaren pass; Kelsey Smith also squandered a big chance late on after good leadup work from Michelson and McLaren down the right.
McLaren reduced the gap with eight minutes left after New Zealand received a penalty stroke. But with striker Olivia Merry serving her second period in the sin bin late on, the Black Sticks were a player down for an important few minutes at the death.
Goalkeeper Sally Rutherford did some resolute defensive work, Michelson was always a threat, but New Zealand, who had slightly more shots on goal and circle penetrations than Japan, ultimately paid for not having done enough going forward through the first three quarters.
Commonwealth Games champions New Zealand play world No 5 Australia in their final group D game on Sunday morning (NZT).
They can still win their pool and advance directly to the quarter-finals with a victory in that match. The second and third placegetters play crossover games to reach the quarters.
In the other pool D game today, Australia and Belgium played out a scoreless draw, which leaves Australia top of the group on four points, with New Zealand and Japan on three and the Belgians one.
"It's certainly not the way we wanted to do things. We want to win our pool and we have to focus on that Australia game. The big thing is it is still in our own hands," Michelsen added.
New Zealand will need to lift their performance significantly to topple an Australian outfit who outscored them 11-2 in three internationals in May.
