Am I likely to be perceived as less successful if I start as an assistant professor at age 40? Several professors, including my former advisor and a senior member of my research community, have been encouraging me to apply for a faculty job. I am torn about it mostly because I am 40 years old. Leaving a job in a research lab to start as an assistant professor would in a way seem like a starting all over again. 

I believe that my pre-PhD experience leading projects would lessen the learning curve that new tenured track faculty goes through. On the other hand, I am not sure if there would a be a stigma associated with my age. I would have gone for an academic position ten years ago in a heartbeat, for the research, freedom, and teaching. But I had personal reasons for not being able to pursue PhD sooner. 

Is it too late to do it now? Would the low academic rank to age ratio make my job harder, leading to possibly being prejudiced that I must not be successful to still be at the lowest branches?

There are several threads here asking about pursing PhD later in life, but I do not recall any of them addressing starting an academic carrier.
I would say it depends. In the following question, JeffE resoundingly stated that age does not play into the decision whether to appoint somebody for an academic position. Yet, ETH Zurich (one of the world's premiere institutions in the technical sciences) even publicly states that they will rather not hire an assistant professor older than 35 (see the information box on the right).

Pragmatically, you may be a bit out of the norm. This may give you a small edge in some cases, and may be a small disadvantage in others. For every academic that is concerned about your age, there will be another one that values your industrial experience. I would say, if age is the only thing holding you back, then go and apply for assistant professor positions.


  Leaving a job in a research lab to start as an associate professor would in a way seem like a starting all over again.


Assistant professor isn't the same as associate professor. Both are not the same as "starting all over". In practice, in most places I have seen, professors on all levels are able to work quite independently, so none should be seen as an entry-level job. Assistant professor may be entry-level in terms of professorships, but it is actually a quite senior position in the wider context of academia.