The British-based Auto Cycle Union issued a statement on the race website to confirm the 43-year-old Matsushita was killed in an accident at Ballacrye in the north of the island. The practice session was immediately stopped.
The ACU said Matsushita was an experienced rider from Saitama, Japan, who won the 2008 Motegi Endurance race and first competed at the TT Races in 2009.
"Yoshi was a really popular competitor who had a large number of friends in the TT Races paddock," ACU course spokesperson Gary Thompson said.
"He was a genuine and friendly character who always had time for everyone. He will be sorely missed."
A coronial investigation is underway.
Fatalities are common in the Isle of Man races, which are held on more than 60km of public roads around the island in the Irish Sea.
British MotoGP rider Cal Crutchlow tweeted: "Sad news from TT tonight. Thoughts are with Yoshinari family and all involved."
TT deaths this century
Stephen Wood - May 29, 2000, Whitegates
Chris Ascott - May 30, 2000, Westwood Corner
Raymond Hanna - May 31, 2000, Greeba Castle
Les Williams - June 9, 2000, Ballaugh
Colin Daniels - May 27, 2002, Bray Hill
David Jefferies - May 29, 2003, Crosby
Serge Le Moal - May 29, 2004, Braddan Bridge
Paul Cowley - June 2, 2004, Black Dub
Colin Breeze - June 5, 2004, Quarry Bends
Joakim Karlsson - May 30, 2005, Douglas Road Corner
Lee Harah June 4, 2005, Parliament Square
Gus Scott - June 10, 2005, Rhencullen
Jun Maeda - May 29, 2006, Ballahutchin Hill
Marc Ramsbotham - June 8, 2007, 26th Milestone
John Crellin - June 12, 2009, Mountain Mile
Paul Dobbs - June 10, 2010, Ballagarey
Martin Loicht - June 10, 2010, Quarry Bends
Bill Currie - May 31, 2011, Ballacrye
Kevin Morgan - May 31, 2011, Ballacrye
Derek Brien - June 6, 2011, Gorse Lea
Yoshinari Matsushita - May 27, 2013, Ballacrye