Once again Jeff Hopkin's side started the match positively with Teigen Allen firing off a low shot three minutes in only to see it save by Nadeshiko's 'keeper Arisa Mochizuki.
Ten minutes later it was Casey Dumont's turn to be called into action when she took care of Kumi Yokoyama's effort in the 12th minute but less than a minute later Hikaru Naomoto went closer still when her long range strike rattled the post.
The rest of the half saw a tight midfield tussell with neither side able to gain the upper hand or create clear cut chances for their strikers.
Ayu Nakada fully picked her way through the Australian defence in the 40th minute but she was only able to find a way past Dumont. However, two minutes later, they Japanese were through.
In the 43rd minute, Kyokawa evaded Hannah Brewer's tackle in the before beating Dumont near post with a low driving strike to give the Japanese 1 – 0 lead at the break.
As they have all tournament, Australia came out for the second-half determined find a way back into the match. First game heroine Emily Gielnik was substituted into the match with nearly immediate results 53rd minute header forcing Mochizuki to push it out for a corner.
Two minutes later Gielnik was in the action again when her strong resulted in a strike flashing just high of the Mochizuki's far post with the 'keeper beaten.
After surviving the onslaught, Japan looked to double their lead and on the hour went close with only Dumont able to stop Yokoyama as she headed goalward. .
Dumont again denied the leaders as she saved Ayu Nakada's back post attempt and then survived Shibata's attempted lob.
Fighting till the end, the Young Matildas again fashioned a final chance to level the scores when Tara Andrews fired just wide and Gielnik guided a header at the keeper ensuring Japan held on for the three points.
Disappointed with the result, Young Matildas' coach Jeff Hopkins again lamented lost opportunities.
"It is a concern when you don't score but we have created chances, especially against DPR Korea, we had enough chances to win the game."
"I'm disappointed in some respects that although we could have been a few goals down, we were still in the game right at the end and missed a couple of chances that could have got us a draw," he added.
"Japan are a very good side, they have a lot of sharp, technical players and they did cause us a number of problems, the biggest of which was probably the striker coming off the front to drop into the hole."
Currently sitting in fourth place, the loss still sees the Young Matildas in charge of their destiny as they take on third placed China in the next match.
"We need to sit down and have a think about how we're going to play and the structure of the team. I thought we got caught between two styles, we didn't play out well enough and when were a little bit more direct, we didn't do that well either.
"We've got to make sure for the next game that everything's right and everyone's on the same page."