Kospi loses 0.5%
South Korean shares ended at their lowest levels since April 3 on the first implementation day of a new policy which sees the benchmark Kospi index's daily trading range doubled to 30 percent.
Tourism and retail-related plays continued to come under selling pressure amid the country's outbreak of the Middle East Respiratory Syndrome (MERS). Korean Air Lines and Asiana Airlines slumped 6.1 and 5.7 percent, respectively, while hotel and duty-free shop operator Hotel Shilla and Hanatour Service closed down more than 4 percent each.
Cheil Industries tumbled 7.1 percent to a near three-week low due to uncertainty over whether its $8 billion all-stock takeover bid for Samsung C&T Corp will succeed. Shares of the latter closed down 2.3 percent.
Orion announced that it is considering a bid for British supermarket retailer Tesco's South Korean unit after the market close. Shares of the snack maker plummeted 4.4 percent on Monday.
On the domestic data front, South Korea's exports in May fell 10.9 percent from a year earlier while imports declined 15.4 percent, according to revised customs agency data. Meanwhile, the finance ministry said Monday that the government will maintain an expansionary fiscal policy until the country's economy recovers.
Read MoreTravelers avoid South Korea amid MERS scare, but will it last?
A tick up in the dollar-yen helped Japan's benchmark Nikkei 225 to trim losses and eventually finish in neutral territory.
Export-oriented plays were mixed, with blue-chip Toshiba and Sony ended up 1.7 and 0.8 percent, respectively, while Nissan, Honda Motor and Suzuki Motor lost 0.6 percent each. Honda Motor said it would restate its financial results for the last business year to account for about $360 million in additional costs related to an expanded recall.
Among the most actively-traded stocks, Softbank recouped early losses to bounce up 1.5 percent, while banking counters such as Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group pared gains to end flat.
Read MoreAsia central banks, trade in focus this week
ASX sags 0.1%
Australia's S&P ASX 200 index recovered from early losses to end with marginal losses.
Specific stocks were in focus on Monday; Arrium slumped 6.3 percent after forecasting a sharp drop in future iron ore production and said it will take a further A$320 million impairment charge this year.
Ten Network plunged nearly 2 percent from the get-go following the announcement of a deal between the free-to-air network and Foxtel.
Outperforming the bourse, grocery wholesaler Metcash elevated 2.3 percent on news that it will be selling its automotive division for $275 million.
Indian indices up
Markets in India bucked the downtrend in Asia, with the S&P BSE Sensex and the 50-share Nifty index drifting modestly higher, following the release of key economic indicators.
The wholesale price index (WPI) fell at a slower-than-expected annual rate of 2.36 percent in May, according to government data released on Monday, compared with a 2.65 percent decline in the preceding month.