Ranked as low as 456th, Vishnu lost 5-7 3-6 3-6 after battling the 55th ranked Japanese for two hours and nine minutes, giving the hosts an unassailable 3-1 lead.
Rohan Bopanna will play Go Soeda in the inconsequential fifth rubber.
Vishnu was handed the Davis Cup cap after Somdev Devvarman was ruled out of the rubber because of a shoulder strain he suffered during the first day`s match against Yuichi Sugita.
India came to the play-off stage after losing the World Group first round to reigning champions Serbia and will now yet again strive in the Asia-Oceania Group I in 2012 season.
Thanks to the doubles win of Mahesh Bhupathi and Rohan Bopanna, India were afloat in the tie after Somdev and Bopanna had lost both the singles on Friday.
India needed Somdev badly on Sunday but his unavailability hit the visitors hard.
It was enormous responsibility to fill in the shoes of Somdev but Vishnu did show the stomach for fight although he could not maintain the intensity with which he presented his challenge early on.
The 24-year-old Vishnu made all the right moves right from the word go. Nervous he might have been but it never showed in his game.
Vishnu did not look like a debutant as he made a player of Nishikori`s ability to work hard for his points.
Vishnu`s impressive game, specially the double-handed backhand coupled with good serve and composure, reduced the ranking difference to a mere statistics, at least in the first set.
The first break of serve came as late as in the 11th game of the first set as Vishnu went neck and neck with Nishikori in the first 10 games.
Facing a breakpoint, Vishnu approached the net but Nishikori cashed in on the chance by smashing a forehand past the Indian and then held his own in the next to take the set.
As Nishikori stepped up the pressure, the Indian was again staring a break in the first game of the second set but saved both the chances.
Nishikori kept opening the lead and succeeded in breaking Vishnu in the third game, which eventually put him ahead 5-3 by the eighth game.
The Indian saved first of the three set points before double faulting on the second to hand a 2-0 lead to Nishikori.
Vishnu was still fighting and saved two match points in the eighth game of the third set, having suffered an early break, but that was not good enough and Nishikori had no problem in ensuring Japan`s passage to World Group after 26 years.