The Queenslander finished three shots behind winner, Yusaku Miyazato, an Okinawa-born golfer and a member of the Miyazato family golfing dynasty which includes his sister and former world number one, Ai.
It was the 36-year-old Miyazato’s fifth Japan Tour title and his second in succession having won the Crowns at his last start.
Kennedy - who entered the final round in ninth place - produced one of the better final rounds of the day including a back nine 31, but his closing half was matched by Miyazato who came from two shots behind overnight leader Toru Taniguchi who faded to finish in a share of fourth.
It was Kennedy's second top-10 finish for the season and moves the 42-year-old to ninth on the 2017 Japan Tour money list.
Brendan Jones and Aaron Townsend were the next best Australians, tied for 29th.
Former winner of this event Adam Bland was tied for 40th, Kurt Barnes 45th and Won Joon Lee 58th after a poor weekend.
The Japan Tour moves to Kyoto this week for the Kansai Open Championship, which Kennedy won in 2013.