India, who were unbeaten in the tournament ahead of today's game, took the lead in the 33rd minute against the run of play through Chanchan Devi's goal from their first penalty corner.
The Japanese girls, who trailed 0-1 at halftime, created numerous chances in the opening half including three penalty corners but the defence stood tall to deny the hosts.
After the change of ends, India continued to play the second fiddle as Japan pressed hard for the equaliser. But the Indian defence continued their fine work and managed to hold on to Japanese till the last 11 minutes of the game.
With just two minutes to go for then hooter, the Indian defence once again wilted under pressure when Otsuka Shiho scored the winner by converting a penalty corner.
India, who had earlier stunned China 4-2 before thrashing Malaysia 5-1, had finished the league proceedings at the second spot behind Japan.
Both India and Japan will now face each other in the summit clash of the women's event on Saturday.