Champions in Rio five years ago following a dramatic shoot-out victory over Holland when goalkeeper Maddie Hinch saved four penalties, Britain went ahead through Sarah Jones' early goal.
But Rio bronze medallists Germany hit back to triumph in the Pool A clash through a penalty by Viktoria Huse and Charlotte Stapenhorst's third-quarter winner.
Britain showed purpose and intent from the start at Tokyo's OI Hockey Stadium, gaining three penalty corners in the first four minutes with Sarah Robertson prominent.
German goalkeeper Kira Horn was kept busy, but her team managed to weather a considerable early storm as Britain launched wave after wave of attack.
An opening quarter briefly held up following technical issues after Germany made a team video referral, continued with a fifth penalty corner and Britain opened their account.
Germany could not clear the ball and Wales international Jones was in the right place at the right time to strike from close range and give Britain a richly-deserved lead.
Britain were not as dominant in the second quarter and Germany equalised when Huse sent Hinch the wrong way from a penalty, levelling things up at half-time.
Germany had the ascendancy following Britain's early dominance and they went ahead just three minutes into the third quarter after capitalising on hesitant defensive work, with Stapenhorst finishing impressively.
As with the penalty, there was little Hinch could do and Britain needed to regroup following the German recovery.
The fourth quarter saw Britain reproduce much of their early form in the match, but they could not breach Germany's defence again.
Britain's next game is against South Africa on Monday.