The All Whites took the lead in the seventh minute though Shane Smeltz and then withstood a barrage of Italian pressure for most of the rest of the match.
Marcello Lippi's men found a way through in the 29th minute, Vincenzo Iaquinta stroking home an equaliser from the penalty spot after Tommy Smith was judged to have pulled down Daniele de Rossi in the box.
"We knew we'd be up against it tonight but we showed great resilience and I'm well pleased," New Zealand coach Ricki Herbert said. "We're going to be bloody hard to beat I'll tell you that."
This was by far the greatest result in New Zealand's modest footballing history. Their one previous appearance in their World Cup finals ended in three defeats.
Simon Elliot hoisted a long free kick in from the left towards the back post. It floated over the heads of the Italian defenders and bounced off Fabio Cannavaro's knee, leaving Smeltz free to prod the ball home from inside the six-yard box.
On 22 minutes, Zambrotta floated a right foot shot just over the corner of post and crossbar, and five minutes later Riccardo Montolivo saw his low right foot drive cannon off the base of Mark Paston's right hand post and run harmlessly across the face of goal.
A goal seemed inevitable and two minutes late it came. Smith tugged at De Rossi's shirt inside the penalty area, the Italian made a theatrical dive to ground and Guatamalan referee Carlos Batres pointed to the spot.
