Anyone born after 2008 will not be able to buy cigarettes or tobacco products in their lifetime, under a law expected to be enacted next year.
"We want to make sure young people never start smoking," Health Minister Dr Ayesha Verall said.
The move is part of a sweeping crackdown on smoking announced by New Zealand's health ministry on Thursday.
Doctors and other health experts in the country have welcomed the "world-leading" reforms, which will reduce access to tobacco and restrict nicotine levels in cigarettes.
"It will help people quit or switch to less harmful products, and make it much less likely that young people get addicted to nicotine," said Prof Janet Hook from the University of Otago.
The crackdown has been met with mixed reactions.
"I reckon it's a good move, really," one man told Reuters news agency. "Because right now there's a lot of young kids walking around with smokes in their mouth. Public are asking how they're getting these smokes.
"And it's also good for myself too because I can save more money."
However, others have warned that the move may create a black market for tobacco - something the health ministry's official impact statement does acknowledge, noting "customs will need more resource to enforce border control".
"This is all 100% theory and 0% substance," Sunny Kaushal, chairman of the Dairy and Business Owners Group, a lobby group for local convenience stores, told New Zealand's Stuff news site. "There's going to be a crime wave. Gangs and criminals will fill the gap".