Despite a brave maiden century from new opener Dave Warner, Australia lost the second match of the two-game series by just seven runs.
The Aussies were all out for 233 after resuming at 0-72 overnight and needing 241 to win.
It was New Zealand's first Test win over Australia in more than two decades and squared the two-match series at 1-all.
Warner, 25, was named man-of-the-match ahead of new Kiwi seamer Doug Bracewell with his 6-40 second innings haul and 9-60 for the match.
Australia's new pace sensation James Pattinson was player-of-the-series for his 14 wickets over the two Tests.
Warner carried his bat for 123 runs as Australia's potential saviour as five of his batting partners departed before lunch and then another four in less than an hour after the break.
The Australian last pair survived two decision review referrals in their nail-biting last stand of 34, but needed to make 42 to win the match after the ninth wicket tumbled.
Hughes was out early without adding to his overnight 20 and Warner was left to save his nation in only his second Test.
Tailender Nathan Lyon was last man out for nine.
Third-gamer Bracewell was the Kiwis' main destroyer as he rattled Australia's middle and tail-end batting.
He skittled young quicks Pattinson and Mitchell Starc in successive deliveries to leave the last Aussie pair needing a partnership of 42 to win the match..
Pattinson was out for four when he slashed another catch into the slips.
Shortly after Warner posted his ton, Brad Haddin lost his is wicket with an edge to first slip off the bowling of Tim Southee to be out for just 15.
Just three balls later, the Aussies went from bad to worse, with Southee claiming first-innings top-scorer Peter Siddle for just two.
It was only Warner's fourth first-class hundred in 13 matches at the longer form of the game for the left-hander more renowned for his Twenty/20 big hitting.
As Warner posted his ton Australia still needed another 59 runs to sweep the series 2-nil after a nine-wicket victory in Brisbane last week.
The home side plummeted to a shaky 5-159 when captain Michael Clarke was out for a duck and his side still 81 runs behind.
And the very next delivery left-hand veteran Michael Hussey was out leg-before-wicket to Bracewell.
Australia lost 3-0 in less than 15 minutes just before lunch.
Hughes was out for the fourth time in as many innings edging a ball into the slips from Kiwi seamer Chris Martin.
Clarke was out to an ungainly edge into the slips with just eight minutes to play before lunch shortly after another blow with the departure of former captain Ricky Ponting for just 16.
Ponting completely misjudged an aggressive back-foot shot and spooned an easy catch into the covers from the bowling of Bracewell.
Ponting survived an anxious moment when he edged a ball into the slips which just dropped short of a catching chance and raced away the third-man fence for his second boundary.
The home side suffered a second loss into the run-chase when Usman Khawaja (23) edged a catch to Kiwi skipper Ross Taylor from left-arm seamer Trent Boult.
Hughes did not add to his overnight score before his all-to-common dismissal mode from a delivery pitching in line with his stumps and angled across his probing bat to edge a straight forward catch to Martin Guptill at second slip.
It was the fourth time in the short series that Guptill accepted the edged catch from the battling Hughes.
Hughes, 23, is now certain to be dropped with regular opener Shane Watson expected to be recovered from a hamstring injury to resume in the Boxing Day Test against India in a fortnight.
Ironically, though as Warner settled into the finest outing of his short Test career, the dashing leftie was troubled with a back complaint.
He was restricted in his stroke-play and was awkward in his running between wickets before lunch and required brief assessment from Aussie team physiotherapist Alex Kountouris.