Japan's Rio Olympic-bound Under-23s got off to a losing start at the Toulon International Tournament on Saturday, Makoto Teguramori's men going down 2-1 to Paraguay in Group B.
Paraguay, which has brought its Under-21 squad to Toulon and has not qualified for Rio, capitalized on some sloppy Japanese defending to take the lead after 18 minutes, Matias Villasanti intercepting a wayward pass to set up Pedro Baez for a close-range finish.
Japan missed several chances but equalized through Takuma Asano on 66 minutes, the Sanfrecce Hiroshima striker taking a pass from Riki Harakawa and drilling into the bottom corner.
But Paraguay made it two wins out of two with the clincher in the 75th minute thanks to a superb free kick from Sergio Diaz.
"It was a close game but finally we lost. This loss can be a good lesson for us as it can help us to see our mistakes," said Japan coach Teguramori.
"We didn't succeed in stopping the Paraguay attacks on the wings and they were more efficient than us despite our several chances."
Japan lost defender Takuya Iwanami to a left knee injury in the 30th minute of the game and he looks set to miss the rest of the tournament.
"After a first look at the injury it looks like it will be tough to play again at this tournament," said Teguramori.
Japan plays its next game against Portugal on Monday.