Japan's Nikkei 225 index plunged 4.4 percent to 8,699.52 in the morning session, while Australia's benchmark S&P/ASX-200 index lost 5.1 percent to 3,782.20. New Zealand's benchmark NZX 50 index was down 3.7 percent to 3,069.08.
Michael McCarthy, chief strategist at Sydney-based stockbroker CMC Markets, said a major concern was that the U.S. economy was slowing down.
"We're clearly in fear territory," McCarthy said. "The major driver here seems to be weakness in the U.S. economy. There are fears that it's starting to stall and if that's the case, the whole global growth scenario could fall over."
The losses come on the heels of a rout on Wall Street on Monday, the first trading day since ratings agency Standard & Poor's downgraded American debt.
The Dow Jones industrials fell 634.76 points, the sixth-worst point decline for the Dow in the last 112 years and the worst drop since December 2008. Every stock in the Standard & Poor's 500 index declined.
The S&P downgrade wasn't the only catalyst for the fall. Investors are also worried about the slowing U.S. economy and escalating debt problems threatening Europe.