Asian stocks were sold off on Thursday, following declines on Wall Street overnight, after Federal Reserve Chair Janet Yellen suggested interest rate hikes could happen sooner than expected.
At the conclusion of the Fed's two-day policy meeting, Wall Street shares dropped on remarks from Chair Janet Yellen, who said interest rate increases would likely start six months after the Fed's monthly bond-buying program ends. That saw the blue-chip slide more than 200 points before it pared some losses.
(Read more: Has Yellen just unleashed the dollar bulls?)
Nikkei 1.6% lower
Japanese shares snapped their 2-day winning streak to end at their lowest levels since February 6. For the week, the benchmark lost 0.6 percent; markets will be shut on Friday for holidays.
Sharp tumbled over 5 percent while banks also suffered; Mitsubishi UFJ and Sumitomo Mitsui Financial lost over 2 percent each
Toyota Motor eased 1.5 percent after being slapped with a $1.2 billion fine from the U.S. Justice Department to settle a probe into safety issues.
Sentiment also soured after data showed foreigners sold a record amount of local stocks last week.
(Read more: Goldman Sachs slashes China growth outlook)
Shanghai drops 1.4%
Mainland shares reversed earlier gains to track Asia-wide losses while the yuan hit a fresh one-year low against the U.S. dollar, losing more than 1 percent for the second straight session.
Property stocks rose on news that two firms received approvals to make private placements of shares, which could pave the way for more companies to raise funds amid growing fears of defaults.
(Read more: China's debt problems are bad, but not Lehman bad)
China Merchants Property rose over 1 percent while Shanghai Shimao added 0.2 percent.
Sydney down 1%
Australia's resource-heavy benchmark index closed at a more than 1-month low amid weakness in mining shares. Meanwhile, the Australian dollar pulled back from the previous day's three-month high against the greenback.
Gold miners suffered the brunt of losses after bullion prices tanked 2 percent, their biggest one-day drop in three months. Kingsgate Consolidated tumbled 20 percent while Alacer Gold and Evolution Mining dropped over 9 percent each.
The nation's largest department store Myer lost 5 percent after reporting a fall in first-half earnings.
Kospi slips 0.9%
South Korean shares closed at a 6-week low on continued foreign selling, which saw large caps Hyundai Motor and Samsung Electronics ease 0.6 percent each.
(Read more: Can South Korea become the next Vegas or Macau?)
Emerging markets decline
Indian shares inched down 0.4 percent while Indonesia's Jakarta Composite lost over 2.5 percent. Meanwhile, the rupiah lost 1 percent against the greenback, hitting a one-week low.
In the Philippines, shares closed down 0.7 percent while the Philippine peso tumbled to a more than 1-month low.
— By CNBC.com's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC