With the match looking destined to end all square, a deflected goal from substitute Shinji Okazaki in the 89th minute gave the home team the victory.
Coach Graham Arnold was proud of the performance of his players but again disappointed with the result.
"A couple of lapses in concentration cost us the game tonight," Arnold said. "But I'd prefer that errors like these occur during these friendly matches and we learn from them rather than during the Olympics where these types of mistakes will have more severe consequences.
"Making five changes late in the game disrupts the shape of the team. But at this stage it's crucial that we have 18 match fit players for the Olympics. We are still building and the performance was very promising when you consider we had a new central defensive partnership and strike force.
"The biggest positives to come out of the match are the performances of Archie Thompson and Jade North.
"Archie showed everyone the quality of player that he really is. His goal was a just reward for the effort he put in and the eighty minutes of football in tough humid conditions will help boost his match fitness going into the Olympic Games. I was also very happy with the combination that Archie had formed with Nikita up front. They looked very dangerous.
"Jade North also showed great leadership at the back and I'm happy with the way that he has fitted in with the team and our style of football. His experience will be key to our performance at the Olympics and I'm very comfortable with that fact.
"Japan are a very fit team and all their players are in the middle of their domestic competitions. It was the type of hit out we needed in these hot conditions.
"Now we head off for a week in South Korea to continue our acclimatisation process and tournament preparations.
"We are still 14 days away from our opening match against Serbia and that is still our focus," concluded Arnold.