Oil extended sharp losses to fall below $86 a barrel amid expectations a slowing global economy will undermine demand for crude.
Japan's Nikkei 225 stock average slid 3.7 percent to 9,303.95 and Hong Kong's Hang Seng dived 4.8 percent to 20,844.59. China's Shanghai Composite Index lost 1.9 percent to 2,633.52.
"Losses today have been indiscriminate," said IG Markets strategist Ben Potter in a report. "The big question on everyone's mind is what will happen across European and US markets tonight and will there be any form of emergency policy response?"
The Dow closed Thursday down 512.76 points, at 11,383.68. It was the steepest point decline since Dec. 1, 2008.
Thursday's decline was the ninth-worst by points for the Dow. In percentage terms, the decline of 4.3 percent does not rank among the worst. On Black Monday in 1987, for example, the Dow fell 22 percent.
Investors fretted over the U.S. economic recovery ahead of Friday's release of crucial jobs figures for July, which often set the tone in markets for a week or two.
Many were also rattled by the lack of agreement in Europe about debt and how to stabilize the euro, said Tom Kaan of Louis Capital Markets in Hong Kong. He said they were watching to see if the U.S. Federal Reserve launches a new stimulus effort.
"It's a general fear that is clouding the markets at the moment," Kaan said.
Elsewhere in Asia, South Korea's Kospi shed 3.6 percent to 1,945.72 and Taiwan's benchmark skidded 5.1 percent to 7,891.66. Australia's benchmark dropped 4.1 percent to 4,101.20 and India's Sensex shed 2.2 percent to 17,312.04.
Investors, already fidgety after protracted political bargaining to raise the U.S. debt limit and worries that Italy and Spain are getting deeply embroiled in Europe's debt crisis, searched for assets considered safer such as gold.
In Europe, most markets shed more than 3 percent Thursday. France's CAC-40 tumbled 3.9 percent, Germany's DAX lost 3.4 percent and Britain's FTSE 100 also slid 3.4 percent.
"Stocks will continue to dive, especially in Euroland, where profits are disappointing analysts' estimates," said Carl B. Weinberg of High Frequency Economics in a report.
In currency markets, the dollar edged down to 78.64 yen from late Thursday's 79.02 and the euro weakened slightly to $1.4116 from $1.4130.
On Thursday, Japan's government intervened in markets to weaken the yen against the dollar to support exporters. Finance Minister Yoshihiko Noda said authorities acted to protect the economic recovery following the March 11 earthquake and tsunami.
The dollar had fallen as low as 76.29 yen on Monday. It hit a record post-World War II low of 76.25 yen in the days following the March 11 earthquake and tsunami.
The intervention was coupled with monetary policy easing by the central bank's board.
Japan's moves came only a day after the Swiss National Bank intervened to slow a rise in the Swiss franc, another currency perceived as a save-haven at a time investors are fleeing risky assets such as shaky European government bonds.
Benchmark oil for September delivery was down $1.05 to $85.58 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell $5.30 to settle at $86.63 on Thursday.