A USA team led by 11-time NBA All-Star Kevin Durant was beaten 83-76 by France on Sunday, snapping an Olympic winning streak stretching back to the 2004 Athens Games.
France, with a team containing NBA players including Rudy Gobert and Evan Fournier, limited Durant to just 10 points in the first-round game.
Durant sat out most of the third quarter with foul trouble and when it mattered, he was unable to inspire his team as the French came from behind to take control in the final quarter as the Americans missed their final nine shots.
The USA had looked unconvincing in the build-up to Tokyo and the defeat will underline the fears Durant expressed before the Games that his side will not face a "cakewalk" in Japan.
Fournier top-scored with 28 points for France. Although the Boston Celtics player only made four from 12 from beyond the three-point line, he found his range when it mattered to help the French stun the Americans.
"I tried to be aggressive. As an NBA player I know the players we were facing. We had to show the team how to attack them," Fournier said.
France clawed back a 10-point deficit to set up a breathless final quarter and as the Americans failed to find any rhythm, the French smelled victory in Saitama, where spectators were absent because of coronavirus measures.
Fournier's three-pointer with 57 seconds remaining put his team ahead 76-74 and when Durant hit the rim with a three-point attempt the French closed out the game with a succession of free throws.
When Jayson Tatum fouled Nicolas Batum, the French veteran NBA forward hit both free throws from the line to seal victory.
Gobert played down the significance of the win.
"I mean it's great, but until we have what we want to have around our neck, it doesn't really matter," the Utah Jazz player said.
"Every single guy that came in the game brought us something," he added.
"It's really the team that we want to be and it's exciting for the rest of the tournament."
The USA face Iran in their next game on Wednesday when France take on the Czech Republic.