Investors were reacting to latest economic data, which saw the Asian giant logging a record deficit of 1.589 trillion yen ($15.4 billion) in January, against estimates of a 1.4 trillion yen deficit.
Japan's economy grew 0.7 percent on-year in the fourth quarter of 2013, revised down from a preliminary reading of 1 percent due to a slowdown in capital spending and private consumption.
Among heavyweights, Softbank slipped 0.8 percent on Monday, while Fast Retailing fell nearly 2 percent.
Exporter stocks saw a downfall as the yen strengthened. Toyota Motor dropped 1.2 percent while Honda Motor fell 2 percent.
(Read more: Is the Bank of Japan easing at its limits?)
Meanwhile, the Bank of Japan (BOJ) commenced a two-day policy meeting on Monday.
Sydney falls 0.9%
Australia's key S&P ASX 200 index slipped from a five-and-a-half-year closing high on Monday, as China's below-view trade data over the weekend took a hit on miners.
Copper prices near a seven-month low sent resource stocks tumbling. Atlas Iron sank over 10 percent while Fortescue Metals suffered a beating with a hefty loss of 9.4 percent. Rio Tinto and Whitehaven Coal shed over 5 percent each.
Leighton Holdings stood out with a nearly 12 percent gain, after Germany's Hochtief said it is seeking to boost its majority stake to 74 percent in Leighton.
Wesfarmers also bucked the downward trend with a 0.4 percent gain, on news that it planned to sell its insurance broking business via an initial public offering worth around $1.02 billion.
(Read more: Copper's 'fall out of bed' underscores China woes)
Seoul drops 1%
South Korean shares dropped to a one-week low on Monday, as investors sought flight-to-safety on worse-than-expected data from China.
"The local index has struggled to gain firm trading directions even with positive economic indicators - (this week's) mixed data will likely result in scrambled trade for investors. The China data was a warning for investors to keep vigilant," Seo Dong-pil, a strategist at IBK Securities told Reuters.
Blue-chip heavyweights Posco and Samsung Electronics slipped 1.4 and 2 percent each.
Lotte Chemical dropped 5.7 percent, on brokerage reports that the company would post dismal earnings in the first-quarter of 2014.