Auckland University has slumped in international rankings, and is now barely clinging on among the top 200 universities in the world.
It has dropped from 165th to 192nd on the UK's Times Higher Education Index, which measures teaching, research, and international outlook.
Times Higher Education editorial director, Phil Baty, said its decline was a big blow to the country, as it was the only New Zealand tertiary institution in the top 200.
"If current trends continue then the country may not have a world top 200 representative for the first time in future years. New Zealand will need to up its game if it wants to remain a key global player in higher education," he said.
Mr Baty said Chinese universities were rising up the rankings, but the United Kingdom and the United States continued to dominate the top spots.
Otago University is the next-ranked New Zealand institution, in a group between 201st and 250th, followed by Canterbury and Waikato between 351th and 400th.
"Otago's result confirm its strong position within the top echelon of the top 2-3 percent of universities worldwide, and as one of New Zealand's top two universities," said Deputy Vice-Chancellor Professor Helen Nicholson in a statement.
AUT, Massey, Victoria and Lincoln Universities all have rankings outside the top 400.