The 35-year-old girl was found early Sunday, bleeding by resort staff in the town of Kovalam and is undergoing treatment at a hospital in the Kerala state capital Thiruvananthapuram.
She has been declared by doctors out of danger although the woman sustained internal injuries.
Police identified the accused as a 25-year-old whose family runs a handicrafts store in the tourist hot spot.
"He continues to be sent to judicial custody, and we are waiting for the victim to recover to record her full statement," local police officer Vipin Kumar told AFP.
Japanese officials in New Delhi have been educated concerning the event, he said.
The woman arrived in the seashore town on Saturday and came to India two weeks ago, hours before the alleged assault took place.
It was unclear how the two met, authorities said.
Sexual attacks on tourists in India are prevalent, with several Western countries warning visitors about the chance.
Last year a Japanese girl was drugged and raped using a tourist guide in the western city of Jaipur, less than a month after six men gang-raped a 22-year old Japanese tourist in the eastern city of Kolkata.
An Indian court in June convicted five men for gang-raping a 52-year old Danish tourist in New Delhi in 2014. They were jailed for life.
India is facing intense scrutiny over its efforts to suppress violence against women, in general, following the fatal gang rape of an Indian medical student in New Delhi in December 2012, which sparked an international outcry.