The national team started on the right foot through Olympic bronze medallists, Aaron Chia-Soh Wooi Yik who overcame the feisty challenge of world No. 16 Takuro Hoki-Yugo Kobayashi 22-20 14-21 21-16.
Japan however levelled terms quickly through former world No. 1 Akane Yamaguchi's 21-14 21-14 win over S Kisona.
World No. 8 Lee Zii Jia then fell to a 18-21 10-21 defeat to world No. 1 Kento Momota before world No. 10 Nami Matsuyama-Chiharu Shida clinched the tie by beating Pearly Tan-M Thinaah 2-16 21-17.
In the dead rubber, fast-rising mixed doubles pair Hoo Pang Ron-Cheah Yee See lost to world No. 5 world Yuta Watanabe-Arisa Higashino 21-16 21-9 in 35 minutes.
With Malaysia finishing as the Group D runners-up, they will face Indonesia in the quarter-finals.