The Kyoto-based firm posted a net loss of 17.23 billion yen ($220 million) for the three months through June, compared with a loss of 25.51 billion yen a year earlier.
The maker of the 3DS and Wii games consoles said its operating loss also shrank to 10.33 billion yen from 37.71 billion yen for the same period last year, but sales fell 9.7 percent to 84.8 billion yen.
"The profitability of the Nintendo 3DS hardware is improving, but the hardware has been in negative margin," the firm said in a statement.
Nintendo also said it suffered a foreign exchange exchange loss of 21.1 billion yen, as the strong yen made the firm's products more expensive overseas while eroding the value of its foreign-earned profits.
For the previous fiscal year ended in March, Nintendo posted its first annual loss since becoming a public company, blaming the soaring yen and price cuts on its consoles for sinking it 43.2 billion yen into the red.
The 3DS, the world's first video game console with a 3D screen that works without special glasses, sold 1.86 million units thanks to brisk sales of games such as "Mario Tennis Open", "SUPER MARIO 3D LAND", and "Mario Kart 7".
The Wii home console, which is set to be replaced by the updated Wii U by the end of this calendar year, saw global sales of 710,000 units.
Despite the loss Nintendo left its annual forecast unchanged, saying it would return to profit in the current fiscal year to March 2013, with a profit of 20.0 billion yen on sales of 820.0 billion yen.
"We will strive to take advantage of the release of 'Nintendo 3DS XL' to solidly revitalise the Nintendo 3DS market from this summer through fall," said Nintendo, referring to its planned launch of its wide-screen 3DS.
The results were announced shortly after Japanese markets closed on Wednesday, with Nintendo shares falling 1.57 percent to 8,150 yen.
The company in August slashed the price of its new Nintendo 3DS by about 40 percent in Japan after a lacklustre debut, followed by similar reductions overseas as it struggled to boost sales ahead of the Christmas rush.
Nintendo has struggled in the face of competition from not only its traditional rivals such as PlayStation maker Sony but also from inexpensive online games that can be downloaded to smartphones and tablet computers.