The drop of 12% has been blamed on the fact tuition fees for Northern Irish students are cheaper if they study at home now Scottish universities charge them up to £9000 a year.
The drop means overall applicants from England, Wales and Northern Ireland declined by 0.6% in 2013/14 - with numbers dropping from 34,760 to 34,540.
The decrease is important because students from the rest of the UK (rUK) now pay annual fees of up to £9000, helping universities raise vital income.
The Universities and Colleges Admissions Service (Ucas) figures show an increase in applicants from both England and Wales.
They also show the number of Scots applying to universities here increasing by nearly 3% to 40,470 - a record.
Cabinet Secretary for Education Michael Russell said: "It is welcome news that once again, a record number of Scots have applied to university.
"What's more, the contrast with England - where application numbers still have not returned to pre-tuition fee levels - is stark."
Alastair Sim, director of Universities Scotland, which represents university principals, said: "The number of students from England applying to Scotland is up again by a steady 1.5% and the overall number of applicants from the rest of the UK has held pretty steady.
"This decrease is all accounted for by a fairly steep one-year decline in applicants from Northern Ireland, but the applicant figures for entry to Scottish universities this autumn look very healthy."
Gordon Maloney, president of national student body NUS Scotland, said:
"It's great to see application rates this year continue to grow year on year.
"To ensure progress on fair access, universities must convert as many applications to places as possible for talented people from our poorest communities."