Australia was undone by Mana Iwabuchi's scrappy goal.
The Japan substitute found space at the back post to beat Lydia Williams and end the Matildas' run at the quarter-final stage for the third straight World Cup.
87' GOAL!! Substitute Iwabuchi puts #JAP in front #AUS 0-1 #JPN Follow LIVE http://t.co/KsNyhKIyVV #AUSJPN #SBSTWG http://t.co/DrOFWLcYVc — SBS - The World Game (@TheWorldGame) June 27, 2015
The victory was all Japan deserved after a bright and organised show, but left Australia shattered with extra-time looming.
The result mirrors the Matildas' loss in the 2014 AFC Asian Cup final and sends Japan into the last four, where it will play England or Canada.
Coach Alen Stajcic conceded Japan was a deserved winner.
A proud @TheMatildas coach Alen Stajcic reflects on a gallant display against #JPN http://t.co/uizVcYEHzA #AUSJPN http://t.co/LDDzHzIa2C — SBS - The World Game (@TheWorldGame) June 27, 2015
"In terms of courage, heart and spirit, (the Matildas were) fantastic. In terms of execution, not one of our best games," he said.
"Japan were the better team today. It was a scrappy way to score a goal but you can't say they didn't deserve their victory."
Australia was left in the shade by an energetic Japan outfit, with centre-backs Laura Alleway and Alanna Kennedy among the Matildas' busiest and best players.
Kicking off in bright Edmonton sunshine, Stajcic reversed his line-up from the team that beat Brazil, restoring Katrina Gorry and Kyah Simon to the starting XI.
Despite Stajcic's pre-match comments that Australia was the fittest team left in the tournament, Japan was working harder.
Japan's sharp passing game allowed it to dictate terms, with its commitment to defensive structures giving it a firm grip on the match.
In the opening 10 minutes, Azusa Iwashimizu denied Simon at the last moment with a sliding tackle, while veteran striker Shinobu Ohno tested the Matildas' defence.
The Matildas were reliant on wide forwards Lisa De Vanna and Sam Kerr to dribble their way into attack.
Kerr's steal and run brought a yellow card to Iwashimizu on the edge of the area, but Kennedy's free-kick failed to test Japan goalkeeper Ayumi Kaihori.
After the break, Mizuho Sakaguchi coughed up the ball to allow Kerr an opportunity, although her shot was too tame.
At the other end, Japan captain Aya Miyama's backheel flick went narrowly wide with keeper Williams in attention.
Stajcic threw on Larissa Crummer and Michelle Heyman as he looked for a way to break Japan down.
Japan's corner count of 8-0 showed its domination, with Australia unable to use its height advantage from set pieces.
From its final corner came the goal, with Australia unable to clear the attack allowing Iwabuchi to slide in at the back post.
