Singapore's benchmark index declined as much as 1.7%, marking its worst fall in a session in more than five months.
Losses in blue-chip stocks dragged the index, with heavyweights DBS Group Holdings and Jardine Matheson Holdings losing 1.5% and 0.7%.
Tehran's missile attack early on Wednesday was in retaliation to the U.S. drone strike last week that killed Iranian commander Qassem Soleimani.
"Retaliatory action taken by Iran in the face of the on-going U.S.-Iran tensions sets the market's risk aversion interest on fire," Jingyi Pan, market strategist at IG Asia said.
"With expectations of further friction from here, investors are appearing to be pricing for an all-out war."
In broader Asia, MSCI's index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> was 1% lower shortly after China's share markets began trading. [MKTS/GLOB]
The Philippine bourse fell most in over three weeks, with financials and consumer sectors weighing on the index. BDO Unibank slipped 1.3% and consumer food firm Universal Robina Corp fell 3.1%.
Malaysian stocks were down 1%, dragged by heavyweights like Public Bank and Petronas Chemicals Group, which lost 1% and 0.8% each.
Banking and consumer sectors suffered heavy losses in the Indonesian equities, which hit its lowest in three weeks. An index measuring the country's 45 most liquid stocks <.JKLQ45> dropped up to 1%.
Bank Rakyat Indonesia was down 0.5% and Unilever Indonesia 0.9%.
Thai benchmark index lost as much as 1.5%, with Airports of Thailand declining 1.7% and Kasikornbank Pcl falling 2.5%.
Real estate and financials weighed on Vietnam stocks, with Vinhomes Jsc and Bank for Foreign Trade of Vietnam losing 1.1% and 1.3%.
By Sameer Manekar