Katsuaki Watanabe, the company president, told a news conference in central Japan on Monday: "The company is facing an unprecedented crisis where it cannot avoid posting an operating deficit in this term."
Toyota, which earlier cut 3,000 jobs in Japan, said it would freeze the launching of a factory in the US state of Mississippi and scale back production in India.
"The company has decided to either delay or review almost all projects aimed at expanding production ability or building new plants," Watanabe said.
Last year Toyota posted more than $2 trillion in operating profit. The company says it still expects to make a profit on a net level, but cut its forecast sharply to $555m, down from a previous estimate of more than $6bn.
The automaker has enjoyed significant profits in recent years fuelled by demand overseas, particularly in the US, for its eco-friendly hybrid cars.
But demand has fallen sharply in the US as a credit crisis at banks slows the entire economy.
Yasuaki Iwamoto, an analyst at Okasan Securities, said: "It is symbolic for a company like Toyota, representing Japan, to suffer a loss.
"Not only Toyota but all the carmakers are finding it crucial to get to the end of this abnormal market condition," he said.
But Watanabe said he believed that global demand will eventually return, especially in emerging economies, once the credit crisis settles, and that Toyota will be in a strong position.
"We have to build on the company's strengths to ensure profit."
Meanwhile, one of India's oldest and largest family conglomerates, Tata Motors, has agreed to inject millions of dollars in to its Jaguar Land Rover subsidiary to prevent its immediate collapse, a Tata spokesman said on Monday.
"The company is spending whatever is required to the best of its abilities," said a Tata spokesman.
He declined to say how much Tata Motors has diverted to Jaguar Land Rover since it bought the brands from Ford for $2.3bn in June.