The Swedes scored three times on the power play, including twice in the first period, and never looked back.
Andre Burakowsky, Filip Forsberg and Jesper Pettersonn, into an empty net, scored with the man advantage for Sweden.
"The most important aspect for us is that we've got to learn to stay out of the penalty box," Canada head coach Steve Sprott said. "We talked coming into this tournament about the ways the referees were going to call the game and I think our players got frustrated.
"Hopefully we learned our lesson here today. The Swedes took advantage of our lack of discipline and we've got to be better than that."
Sebastian Collberg, with a goal and an assist, and Mattias Kalin also scored for Sweden. Burakowsky also had an assist.
Charles Hudon of the Chicoutimi Sagueneens had the only goal for Canada in the third.
Burakowsky opened the scoring at 2:48 on the power play before Forsberg doubled the Swedish lead at 7:36.
Collberg scored at 6:31 of the second and Kalin made it 4-0 at 12:37.
Hudon cut Canada's deficit to 4-1 at 5:03 of the third on the power play before Pettersonn rounded out the scoring at 17:45.
Canada takes on the host Czechs on Tuesday and Sprott said he hopes loss to Sweden will be a wakeup call for his players.
"(The Czechs) are going to be a big, hard-working team. We're going to have to earn everything that we get and I think the players are realizing how good the talent is," Sprott said. "We just can't put on our jersey and show up. We have to make sure we try to outwork our opponent and tonight the Swedes outworked us and obviously their specialty teams were better than ours."