Tony Vidmar’s side matched it with the classy Japanese side early, down just 1-0 at the break before the young Samurai Blue dominated in the second half.
It means the young Australian side ends the tournament with three defeats after earlier losses to Kyrgyzstan (1-0) and Vietnam (3-2).
Japan took the lead inside five minutes through Soichiro Kozuki but the Joeys showed great resilience to stay in the match until half-time.
Keeper Nicholas Suman came up with a string of excellent saves, while the Joeys defence held firm under constant pressure.
The Joeys actually finished the first half stronger, with Dylan Pierias making some space on the edge of the box to get a powerful shot off which forced a strong save from Kokoro Aoki.
Indeed, despite having been overwhelmed in the opening period, it was Australia who arguably finished the half the stronger despite remaining a goal behind at the interval.
Two goals inside the first 10 minutes of the second half seemed to break Australia’s resolve, before Nagi Matsumoto made it 4-0 on 64 minutes.
John Roberts hit the crossbar for the Joeys nine minutes from the end but Japan responded immediately, adding another two goals in quick succession to complete the scoring.
"We gave away a goal straight away so were on the back foot early on. Although we came back into the game in parts our turnover rate and possession was poor,” Vidmar said.
"There was gaps in our team and Japan, an excellent team, were simply playing through us.
"We will go back and review what happened and go from there. Our side is a young one and maybe physically at a disadvantage as we struggled but we always look at the talent and potential we have.
"It will be a big learning experience for them to have played at a tournament like this. For the next stage in their careers they will hopefully take on board these lessons from the past two weeks."
This article was originally published at: http://www.footballaustralia.com.au/article/joeys-lose-to-excellent-japan-at-afc-championships/10wqcx7xglkt01xkun3h5p0thw.