Holger Osieck's players thought they had done enough to earn a point after coming from behind to level in Hwaseong, but they were unable to hold out for the final minutes
Japan are in a strong position to win their maiden East Asian Cup after beating Australia 3-2 to register the first victory of any team at the 2013 tournament.
Goals in the first and second half from Manabu Saito and Yuya Osako respectively saw Japan leading comfortably with the clock ticking down at Hwaseong Sports Complex.
Australia, relatively toothless up to that point, suddenly drew level, bagging two goals in the space of three minutes from Mitchell Duke and Tomi Juric.
However, Osako promptly restored Japan's lead less than 60 seconds after the Socceroos had equalised, sealing the victory and leaving Holger Osieck's men bottom of the standings with one point from two matches played.
Japan, aiming to win their first East Asian Cup crown, are now top on four points, while China and hosts South Korea, both on two points, sit second and third as a consequence of the home team's inferior goal difference.
Osieck stuck with the same starting XI who battled to a fortunate 0-0 draw against the Taeguk Warriors in their opening game, and they started brightly, pressing their opponents high up the field.
But Alberto Zaccheroni's men soon asserted their technical superiority, and opened the scoring in the 26th minute through Manabu Saito, who ran across the top of the Australian 18-yard box, evaded a challenge and dispatched a shot to the far corner of the net from an acute angle.
They should have doubled their lead with seven minutes to go in the first half, when Yohei Toyoda headed straight at Eugene Galekovic from a free header six yards out.
Australia meanwhile were restricted to half chances, Matt McKay going closest with a half-volley from outside the area just before the break.
A slow starting second half came to life in the 55th minute, thanks to a wonderful piece of skill from Yuya Osako.
The Kashima Antlers forward heel-flicked the ball from a short pass out in front of himself before running onto it and shooting calmly beyond Galekovic.
Australia pulled one back against the run of play with 14 minutes to go, when substitute Mitch Nichols looped a ball over the Japan defence, allowing Mitchell Duke to run and finish low beyond Shuichi Gonda, claiming his first international goal in his second appearance.
Next it was the turn of another newcomer, Tomi Juric, to get in on the act, smashing home what was also his first international strike in his second appearance from outside the area to level the scores on 78 minutes.
Just when it appeared Australia had pulled off a remarkable escape act, Osako promptly found himself with plenty of space outside the opposition penalty area, dispatching a well-placed shot beyond a helpless Galekovic to seal the result in Japan's favour.
Osieck must now pick up his players and prepare them for their final match of the tournament against China at Jamsil Olympic Stadium on Sunday, with South Korea taking on Japan at the same venue later the same day.