The strong quake struck 40km north of Te Anau, the tourist hotspot of Fiordland, after 9pm on Thursday at a depth of 53km, according to GeoNet.
Initially measure as a magnitude 6.3, it was later reduced to a magnitude 5.9.
There were no immediate reports of injuries or damage.
The National Emergency Management Agency issued a tsunami evacuation warning for parts of the South Island's west coast but later downgraded its alert to advisory, with strong and unusual currents and unpredictable surges still expected.
It said people should move out of the water, off beaches, and stay away from harbours, marinas and rivers.
More than 20,000 people across the country reported feeling the quake, hazard monitoring system GeoNet said.
Local resident Maylene Puyat, the duty manager at Te Anau's Fiordland Hotel, told Reuters the earth quake was "a bit strong" and she felt shaking for one minute.
"In the hotel, it's shaking, but nothing moved in the hotel," she said.
Another resident told local outlet Otago Daily Times the earthquake shaking was "long and loud" and sounded "like a train".
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