The total aid contribution will be $18.5 million over three years.
The Foreign Affairs Minister Winston Peters said the additional money was for human development, good governance and to help build economic resilience.
The increase comes three years after New Zealand suspended some of its aid over concerns that the judiciary was compromised.
It does not change the situation for the refugees stuck on Nauru however.
New Zealand's offer to Australia to take 150 refugees from Nauru and Manus Islands still stands.
Last year, the New Zealand Law Society said Nauru was sliding towards authoritarianism.
Speaking after the Nauru government rushed through controversial legislation, the society's convenor, Austin Forbes, said the rule of law was under threat on the island.