Takashi Sekizuka's side comfortably dispatched the Pharoahs who ended the game with nine men, to reach the last four at London 2012 having yet to concede a goal
The Nagoya Grampus striker latched onto Hiroshi Kiyotake's inch-perfect through ball after just 13 minutes to send the Blue Samurai on their way, before he was carried off on a stretcher after a collision with Saadelin Saad.
Egypt defender Saad Samir was dismissed for the Pharoahs just four minutes before the break after their best spell of the game and captain Japan Yoshida put the game to bed 12 minutes from time when he met Kiyotake's free-kick.
Borussia Monchengladbach midfielder Otsu then put a deserved gloss on the scoreline with 82 minutes on the clock as Takashi Sekizuka's team reached the last four having yet to concede a goal.
Japan started brightly and it was new Nuremburg signing Kiyotake who led the charge after he firstly glanced a header wide of the post, before his mazy run was thwarted on the edge of the box by Egypt defender Saad.
Keigo Higashi then sprung the offside trap on the left-hand side almost immediately after but his attempted cross towards Nagai was diverted for a corner by Ahmed Hegazi and from the ensuing set-piece Daisuke Suzuki met Kiyotake's cross but he could only angle his header over.
The Albirex Niigata defender was involved again moments later and he should have given his side the lead in the 10th minute, when he met Takahiro Ohgihara's teasing free-kick but he somehow contrived to miss from inside the six-yard box with the goal at his mercy.
It was only a matter of time before the impressive Blue Samurai took the lead though, and they did so just three minutes later through Nagoya Grampus striker Nagai. It was all from Egypt's own doing as left-back Eslam Ramadan was caught in possession deep inside his own half by the sprightly Kiyotake, who fed Nagai with a delightful ball before he rounded the goalkeeper to gleefully slide into an empty net.
But unfortunately for the 23-year-old striker, his joy soon turned to despair as he was withdrawn for Manabu Saito shortly after following a collision with Pharoahs defender Saad in the build-up to the goal.
Sekizuka's side had not conceded a goal on their way to topping Group D and following their blistering start, the 2010 Asia Games champions seemed content to sit deep inside their own half as Egypt enjoyed their best spell of possession in the game so far.
The Pharoahs first foray into the Japanese box did not come until the 26th minute, however, when captain Mohamed Aboutrika beat Hiroki Sakai to a deep cross from the right but he failed to test Shuichi Gonda in the Japan goal. But however fleeting their first attack may have been, Sekizuka's side did not heed that warning and Emad Meteab was unfortunate not to haul Egypt level as he fired Ahmed Fathi's centre the wrong side of the upright.
Hany Ramzy's side had finally began to assert themselves on the game after half an hour and Haras El Hodoud defender Ramadan was next to threaten for the African side, but his ambitious volley flew comfortably wide of the post before his dipping free-kick drifted narrowly over.
But after their best spell in the game, the Pharoahs once again shot themselves in the foot when, just four minutes before the break, they were reduced to 10-men as Saad received his marching orders for clipping the heels of substitute Saito on the edge of the box when the Yokohama F. Marinos frontman burst through on the counterattack.
The decision seemed to spark Japan back into life and a sublime piece of skill from Yuki Otsu set the 22-year-old midfielder free on the right, but he failed to get enough purchase on the shot to trouble Ahmed Elshenawi before his opposite number Gonda survived a scare, when he misjudged a loose ball on the edge of his box with Aboutrika for company.
Ramzy was then forced to shuffle the pack after the dismissal of Saad and midfielder Shehab Ahmed was sacrificed for Mahmoud Alaa Eldin before the break, but predictably it was the Blue Samurai who once again started on the front foot after the restart and left-back Ohgihara rifled his long-range volley into the stand as Japan probed for a second goal.
Egypt had offered little in the way of an attacking threat, but Japan keeper Gonda gave them a glimmer of hope when he spilled a deep cross in the 68th minute, before striker Marwan Mohsen was thrown on in place of Meteab in an attempt to ignite an Egyptian comeback.
But the Pharoahs failed to conjure up any meaningful chances and found themselves two goals down with just 12 minutes remaining, when captain Toshida met Kiyotake's free-kick with a free header. Matters then went from bad to worse for the Pharoahs, who were reduced to nine men when Alla Eldin was forced to be withdrawn after picking up an injury with all three substitutes having been used.
And with just eight minutes remaining, it was 3-0 to Japan when Ohgihara exchanged passes with Kiyotake and suppled an inch-perfect cross for Otsu to extinguish Egypt's Olympic dreams as Japan march on to the last four having yet to concede a goal.