The group disappeared while diving near Nusa Lembongan and Nusa Penida, small islands close to the southeast coast of the popular resort isle, said Bali police spokesman Col Hariadi.
The seven - five tourists and two locally based Japanese instructors - set out on Friday morning after renting a boat from the beach town of Sanur, Kyodo news agency reported.
Local police chief Nyoman Suarsika explained that the group began an afternoon dive in Nusa Penida's Crystal Bay mangrove area and appear never to have surfaced, the report said.
"The weather was extreme at the time. The wind was strong with heavy rain," Suarsika told Kyodo.
The news agency said the missing women were named by police and rescue authorities as Ritsuko Miyata, 59, Emi Yamamoto, 33, Nahomi Tomita, 28, Aya Morizono, 27, Atsumi Yoshinode, 29, Shoko Takahashi, 29, and Saori Furukawa, 27.
Japanese government officials said all the members of the party were experienced divers, having each completed at least 50 dive trips previously, while the instructors were based locally and knew the area, Kyodo said.
Quoting the Indonesian skipper of the rented boat, the report said the Japanese dived twice on Friday morning but failed to return to the vessel after they went out for a third dive in the afternoon.
The country's search and rescue agency and police combed nearby waters, beaches and the surrounding areas in a bid to find the group on Friday and Saturday, Bali search and rescue agency chief Didi Hamzar told AFP.
"A helicopter was deployed ... to spot victims which might be floating in the water. We have still not found any," he said.
The search was halted on Saturday evening and would continue again on Sunday morning, Hamzar added. "We are putting our best efforts and hopefully we can find them in safe conditions."
Yasue Katsunobu, the deputy consul general of Japan in Denpasar, confirmed that the missing were Japanese and said he was "awaiting results of the search".
Nusa Lembongan is a popular scuba diving spot is part of Coral Triangle, widely considered the world's richest underwater wilderness.
It straddles six countries between the Indian and Pacific oceans - Indonesia, Malaysia, the Philippines, East Timor, Papua New Guinea and the Solomon Islands.