Atwal, starting the day at six-under, with three straight 69s, finished at five-under 279, six behind the ultimate winner Japan's Kenichi Kuboya (64).
Kuboya first rallied to get into the play-off and then beat compatriot Katsumasa Miyamoto (68) at the first extra hole, as both totaled 11-under 273 in regulation.
Other Indians in fray, Gaganjeet Bhullar (72) and SSP Chawrasia (75) finished the week at four-over 290 and ended in tied 58th place.
Atwal, starting the final day four off the pace, needed a fast start, but instead opened with a double bogey. The birdie putts just did not fall. After seven pars, he had another bogey on 10th, by which time even a top 10 finish became a distant dream.
More From This Section
For Kuboya the win at the 150 million yen event was the first for the 45-year-old in five years and also provided him with much relief as he was facing the prospect of losing his winner's exemption status on the Japan Golf Tour Organisation (JGTO) this year.
It was his seventh win on Japan Tour, but first since 2012 Japan Open.
Kuboya produced final day heroics when he signed off with seven-under-par 64 to force a play-off at the Chiba Country Club.
Philippines' Juvic Pagunsan had a closing eagle-three on 18 to finish in tied sixth place, which was also his second top 10 finish in Japan in two weeks.
Thailand's Prayad Marksaeng signed off with a 72 that left him in a share of ninth place that also included Bangladeshi Siddikur Rahman.