Tim Southee claimed figures of 7-33 to lead the charge for New Zealand with the ball as England produced an inexcusable batting display to collapse to 123 all out.
It took Southee, who finished the innings with the best figures for a Black Caps bowler in a one-day international, just 4.1 overs to strike as he bowled Ian Bell for eight, before dismissing Moeen Ali (20) with a yorker as England fell to 36-2.
Gary Ballance made just 10 before becoming Trent Boult's only victim, but England looked to have steadied the ship when captain Eoin Morgan joined Joe Root at the crease to steer his side to 104-3.
However, Morgan, whose decision to bat first seemed to play into New Zealand's hands in swinging conditions, departed for 17 when Adam Milne took a stunning catch running from long-on to hand Daniel Vettori a crucial wicket.
Morgan's dismissal sparked the collapse as Southee returned to remove James Taylor (0), Jos Buttler (3), Chris Woakes (1) and Stuart Broad (4) quickly as England continued to struggle with the seamer's accuracy and movement.
Steven Finn (0) was the ninth man to go when he edged Southee to Taylor at first slip, and Root (46), who was the only batsman to offer much resistance against the seamers, then miscued a pull shot to Vettori in the deep as Milne claimed the final wicket.