Yamaguchi fought back from a four-point deficit in the second game to take the match into the decider in which she blew away the reigning world champion.
Sindhu was the better player in the first game and for most part of the second and looked set to record a relatively easy opening win against the fourth ranked Yamguchi.
However, the Japanese took five points on the trot in the second game to level the scores from being 10-15 down. Sindhu then made four errors at the net to allow Yamaguchi reach game point, which she converted with a cross-court smash.
In the decider, Sindhu looked to be completely out of her depth as Yamaguchi raced to a 5-0 lead. Sindhu managed to get just three points before the interval and was thus trailing 3-11 at the break. The rest of the match was more of the same and Yamaguchi ensured that Sindhu did not reach double digits.
Sindhu will now have to win both of her next two games to stay in contention for a place in the next round. She faces China's Chen Yu Fei and He Bingjiao in her next two contests.
Continuing her good form this season, Yu Fei beat Bingjiao 21-9, 21-18 to win her first match. In what was a story of two very different games, Bingiao improved on her dismal show in the first game to match her compatriot toe to toe until it was 18-18. Yu Fei then won three successive points to win the match.
( With inputs from IANS )