Two First-half goals were enough to send Japan through to the final, where they will face Spain.
The Brits had impressed during the tournament with attacking displays but were second best on the day.
In the other semi-final, Spain defeated France 1-0 to set up a meeting with Japan on Friday.
England will face the hosts France in the third-place play-off earlier on the same day.
Image Credit: FRED TANNEAU/AFP/Getty Images