The tornado knocked out electricity to hundreds of homes and flipped over cars in the town of Saroma, on the northern island of Hokkaido.
Local television showed a scene of devastation, with a wide swath of collapsed buildings, badly damaged cars and utility poles strewn across streets. Many of the victims were construction workers building a tunnel near the town, officials said.
Tornados are relatively rare in Japan.
According to the Central Meteorological Agency, the worst tornado previously recorded in Japan was just two months ago, when three people were killed on the southern island of Kyushu. The agency only has records of tornado-related deaths going back to 1961.
The agency said it was studying data to determine the strength and cause of the twister. Local television networks estimated that, judging from the damage, it was one of the strongest to hit Japan since World War II, with wind speeds of 156 miles per hour.
National broadcaster NHK quoted a local woman, Keiko Takeda, as saying that the skies suddenly darkened over the town and when she opened her window winds were swirling outside.
"It was very strong, but it was over very quickly," she said.
Other witnesses said there may have been two tornados, and that after hitting the town they veered off into the surrounding hills.
The twister blacked out some 600 homes and also disturbed phone communications, police and town officials said. Some 350 police officers were being mobilized in the relief effort.
The twister hit Saroma shortly after 1 p.m. local time (0400 GMT), said area fire department official Nobuaki Ueda.
Ueda had no immediate details on the severity of the injuries to the 25 people, although he said 10 were able to go the hospital on their own, while the other 15 were taken in ambulances.
But Yukio Yoshida, a police spokesman of the Hokkaido prefectural (state) police, said one woman was later listed as unconscious at a hospital. A total of 52 people — 45 construction workers and seven residents from damaged homes nearby — were taking shelter at a town gymnasium Tuesday night, said Hokkaido prefectural government official Hirofumi Matsumura.
Matsumura said 40 homes and nonresident structures were either totally or partially destroyed in the twister.
Hokkaido is the northernmost of Japan's four main islands. Saroma, which has a population of 6,244, is approximately 620 miles northeast of Tokyo.