South Korea's stock market was forced to halt trading for 20 minutes after the Kospi index plunged by nearly 9% within minutes of Monday's opening.
The halt is part of a circuit breaker mechanism designed to prevent panic trading and was triggered for the third time this year after a sharp sell-off in technology stocks.
Japan's Nikkei 225 index slid by around 4% – the most in three months – as shares of major tech companies fell.
Oil prices also rose on Monday, fuelling concerns of inflation, after Iran and Israel exchanged strikes for the first time since a ceasefire was agreed between the sides and the US in April.
Trading in South Korea has resumed since the circuit breaker was triggered, with the Kospi index down by about 5%.
The share price of major South Korean tech companies were sharply lower, including those of chipmakers Samsung and SK Hynix.
Overall, the tech-heavy Kospi has seen huge gains in recent months due to a wave of investment in the country's tech companies.
Other Asian stock exchanges, like the Hang Seng Index and the Shanghai Composite were also down on Monday.
The losses follow a wave of sharp drops seen on Wall Street on Friday, where a sell-off in tech stocks saw shares on the Nasdaq lose around 4% – its biggest drop in over a year.
Part of the decline is due to growing concerns among investors over whether the rally in AI companies was unsustainable.
There are also fears of a hike in interest rates, due to a lower-than-expected unemployment rate in April as well as persistently high inflation linked to the war in the Middle East.
The price of the global benchmark Brent jumped by 3.7% to $96.50 (£72.35) a barrel in Asia on Monday, while US-traded crude rose by around 4% to $94.10 after strikes were exchanged between Iran and Israel.
Iran's Islamic Revolutionary Guard Corps (IRGC), which had launched missiles at northern Israel, warned that the attacks are the start of "a full week" of strikes.
Israel later retaliated with attacks on military targets in Iran, despite US President Donald Trump urging the country not to retaliate.
"We are very close to a final deal with Iran. It is going to be a good deal. I don't want it to blow up because of what is happening now," Trump told news outlet Axios.
A ceasefire agreement has been in force since 17 April and has been violated repeatedly by both Israel and Iran.
It is too early to say whether the strikes mark a full escalation of the war, but traders are again pricing in risks to global oil markets, said Associate Professor Jiajia Yang from James Cook University in Australia.
The strikes show that many political issues remain unresolved and oil prices are expected to be volatile unless diplomatic efforts succeed, Yang said.
Oil prices have surged since US and Israel launched strikes on Iran on 28 February and have continued to make huge swings throughout the subsequent ceasefire.
Prices have hovered around the $95 mark in the past week as traders weigh the conflict's long-term impact on global energy flows.
The war has disrupted the flow of oil and gas shipments from the Gulf after Iran threatened to strike vessels that try to cross the critical Strait of Hormuz trade route in retaliation for the US-Israeli attacks.
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