The Blackaps have suffered their first loss of the Twenty20 World Cup, falling to England in their Super 12 clash at Brisbane.
New Zealand could've guaranteed their spot in the tournament semi-finals, but instead came undone against a desperate English side, falling to a 20-run defeat.
The result leaves the Blackcaps, England and Australia all on five points, with each team to play one more pool game.
New Zealand's superior net run-rate sees them retain first position and they have a favourable match-up against Ireland in their last pool fixture.
But coach Gary Stead's men will be disappointed not to seal their spot in the semi-finals with a win over England.
After losing the toss, the Blackcaps were asked to bowl first on a bat-friendly track, and England's openers Jos Buttler and Alex Hales showed why that was the right decision.
Blackcaps bowlers Trent Boult and Tim Southee started strongly, particularly against big-hitting Buttler, who uncharacteristically went at only a run-a-ball pace early on.
But Hales took a liking to New Zealand's pace, hitting a quick-fire half-century, with Lockie Ferguson on the receiving end of several lusty blows.
Blackcaps captain Kane Williamson's decision to introduce spin early paid off, with Mitch Santner and Ish Sodhi combining well to stifle England's charge.
Santner was the first to strike, with Hales advancing at one too many, with the slower, wider delivery evading the opener and wicket-keeper Devon Conway completing the stumping.
New Zealand could've had England a couple more down, if not for dropped catches, with Williamson and Daryl Mitchell both guilty of shelling relatively easy chances.
Moeen Ali (5) was promoted up England's batting order, but could only find Boult in the field, off of Sodhi's bowling.
Liam Livingstone (20) showed why he is one of the best exponents of cricket's shortest format with a couple of big blows, before Ferguson bowled him in the 17th over.
Wickets continued to tumble towards the end of the innings, with Harry Brook (7) hitting a maximum, before Southee had him caught in the deep by Finn Allen.
Buttler (73) departed for a matchwinning knock that included nine boundaries, after Wiliamson and Southee combined to run him out.
Ben Stokes (8) was the last wicket to fall in the final over, with Ferguson trapping him in front for leg before wicket and England finishing on 179/6 after their 20 overs.
New Zealand's chase got off to a nervy start, with in-form openers Devon Conway (3) and Finn Allen (16) both falling inside the powerplay.
Conway never looked settled and was beaten several times, before Chris Woakes had him caught behind by the wicketkeeper.
Allen hit one trademark six, before he picked out Stokes in the deep, off the bowling of Sam Curran.
The Blackaps' best chance of stealing the match came in the form of a Kane Williamson-Glenn Phillips partnership. Williamson played the role of anchor, while Phillips was at his devastating best, after being given a lifeline, courtesy of a sensational dropped catch by Moeen Ali.
The pair put on a 91-run partnership off just 59 balls, with Phillips the chief destroyer, hitting seven boundaries, including three sixes.
But Williamson's wicket for a run-a-ball 40 spelt the beginning of the end for New Zealand, as wickets continued to fall from there on.
Jimmy Neesham (6) and Daryl Mitchell (3) departed in quick succession, as Phillips ran out of partners, before eventually falling for a valiant 62 runs.
Mitchell Santner (16 not out) and Ish Sodhi (6 not out) did their best to bring the Blackcaps close to the target to help with the net run-rate, but New Zealand still fell 20 runs short of the win.
They will play Ireland at Adelaide on Friday, with a win guaranteeing their place in the semi-finals, but they could still advance with a loss as well.
New Zealand 159/6 (Phillips 62, Williamson 40; Curran 2/26, Woakes 2/33) England 179/6 (Buttler 73, Hales 52; Ferguson 2/40, 1/23 Sodhi)
England win by 20 runs
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