Ryan Sidebottom's stunning display with the ball put England in control of the third Test after an amazing second day in Napier.
The left-arm seamer claimed career-best figures of 7-47 as the home side were shot out for just 168 in their first innings.
The Black Caps looked well set when on 103-1 only to suffer an amazing collapse following lunch, losing their last nine wickets for just 65 runs.
It meant England, who had been bowled out quickly for 253 in the morning session, came to bat again with a more-than-useful 85-run lead.
By the close they had moved that along to 176 for the loss of just two wickets, Andrew Strauss unbeaten on 44 in a crucial time - not only for his team but also for his own international career.
Sidebottom's heroics later overshadowed a five-wicket haul for debutant Tim Southee, as England's final three first-innings wickets fell in a hurry in the morning.
The teenager followed up his three scalps on day one by removing Stuart Broad (42) with the very first ball of Sunday's action at McLean Park.
He also got rid of Sidebottom to end the innings and finish with figures of 5-55 after Chris Martin had bowled Monty Panesar, the visitors lasting only 4.1 overs.
New Zealand made a positive start in reply despite the loss of Matthew Bell to the third ball when he shouldered arms to a Sidebottom inswinger.
Stephen Fleming, making his final Test appearance, came in and quickly took the attack to the bowlers, James Anderson coming in for some particularly heavy punishment as his first three overs in the innings cost 45.
The former Black Caps skipper was dropped on 44 by Strauss at first slip and by lunch England looked in disarray, leaking runs at an alarming rate and in danger of allowing their opponents to gain complete control.
However, whatever was said by the coaches and the captain during the break must have struck the right note.
Fleming, who had raced to 59 off 72 deliveries, opened the door by trying to force Sidebottom off the back foot, instead presenting Paul Collingwood with a simple chance at second slip.
After putting on 102 for the second wicket, Jamie How (44) perished soon after when a loose drive found the edge and offered Strauss the chance to make amends.
The only other Kiwi batsman to make double figures was skipper Daniel Vettori who managed to make 14 before becoming the last of Sidebottom's magnificent seven.
Broad proved the perfect foil for his new Nottinghamshire team-mate, dismissing the in-form Ross Taylor for just two with a cracking away swinger and then knocking over tail-enders Southee and Jeetan Patel.
He finished with 3-54 in 17 overs after conceding 22 runs off his first 24 balls.
England's innings suffered an early blow when skipper Michael Vaughan was caught attempting to pull Chris Martin to the fifth ball.
Alastair Cook also fell before the end of play for 37, although by then he and Strauss had steadied the ship to put their side in a strong position with three days still to play in what has already been a remarkable match.