The Kiwis, who reached the last four as the only unbeaten team, were cruising at 89 for one at the midway stage of their innings before England made a strong comeback to give themselves a great chance of reaching the final.
After opener Martin Guptill fell in the third over, Colin Munro (46) added 74 runs with skipper Kane Williamson (32) to lay the foundation for a big total.
England then applied the brakes on scoring with some disciplined bowling and tight fielding, the 2010 champions claiming regular wickets with catches in the deep to peg back their opponents.
Corey Anderson made 28 down the order but New Zealand eventually fell well short of the 175-mark that looked easily reachable at the halfway stage.
For England, who fielded an unchanged side, Ben Stokes claimed 3-26 and produced a run out off the final ball as they conceded only 20 runs in the last four overs.
Earlier on Wednesday England's women lost their semi-final to Australia. – Reuters
Original source: #WT2O Black Caps pegged back by England