Hamish Rutherford and Brendon McCullum plundered half-centuries as the Black Caps took full advantage of a weakened England side to score 201 for four.
Luke Wright, England's most experienced player on show, removed both men to stem the damage but otherwise a ragged performance in the field was fully punished. It meant England would have to surpass their record chase of 181, achieved against India in Mumbai last December, when Eoin Morgan hit a six from the final ball.
Morgan led England with just four of the team that suffered the heartbreaking Champions Trophy final defeat to India on Sunday involved. Morgan's fellow Irishman, Boyd Rankin, was given his England debut and while he took just four balls to claim his first wicket, Morgan's decision to send the Black Caps in soon looked the wrong one.
James Franklin inside edged Rankin through to wicketkeeper Jos Buttler for a first-ball duck but Rutherford and McCullum took up the long handle in a blistering 114-run stand.
Chris Woakes' first over cost 19, including a Rutherford swipe into the square-leg crowd, before the left-hander was given a life on 25 when Ravi Bopara grassed a tough chance above his head at point. It proved costly as New Zealand found the boundary at will as they comfortably operated at 10 runs an over.
Rutherford crashed James Tredwell for back-to-back maximums before pulling him to the rope to bring up his first Twenty20 half-century from 28 balls. McCullum was rewarded for his flashing strokeplay with a top-edged six that went into the second tier of the Oval pavilion, and another six from Rutherford brought up the 100-run stand from 59 balls.
Morgan was forced to shuffle his bowlers and while Bopara produced a comical wide from his first ball, the skipper's seventh option, Wright, finally made the breakthrough in the 12th over. For once Rutherford did not get everything behind a lofted drive to allow Alex Hales to take an easy catch at deep mid-off.
That left New Zealand 116 for two after 12 overs and England fearing the worst with McCullum, the world's top-ranked T20 batsman, seemingly ready to cut loose. He targeted Bopara, launching him into the second tier at the other end of the ground, in an over that cost 22 but Wright cut short his aggression. Wright fired a yorker under McCullum's swinging blade to end his 48-ball 68.
Ross Taylor and Tom Latham added a further 39 from 24 balls, to ensure New Zealand went past 200 for just the third time ever, although England at least restricted them to 45 from the last five overs when worse looked possible.