The home side got their defence of the title to the worst possible start when Tomasi Cama was sent off in the second minute for punching Rhodri McAtee before skipper DJ Forbes was sent to the sin bin. The Welsh made their superior numbers count but the underdogs fully deserved their victory.
The Kiwis opened the scoring through Nafi Tuitavake but McAtee responded with two touchdowns before the Welsh cut loose to score further tries by Aled Brew, Tal Selley and Rhys Webb swept the rampant Welsh to a 28-5 lead.
New Zealand reduced the lead with a try by Viliame Waqaseduadua but by then it was too little too late.
Wales followed their shock victory with a 24-15 defeat to Australia in their second pool game but guaranteed a quarter-final slot against Kenya when beating minnows Niue 34-10 who had nearly pulled off a shock themselves when restricting the Aussies to a narrow 22-17 victory.
Wales manager Dai Jenkins was delighted that his side had finally broken the hoodoo against one of the giants of the abbreviated game to set up a quarter-final showdown against the Kenyans.
"It's the first time we have ever beaten New Zealand so that's a fantastic result for us," he said.
Wales had been boosted for this tournament with the likes of Aled Brew, Lee Beach and Dafydd Hewitt adding considerable strength in depth to the squad.
"We've grown as a team over the past couple of seasons but you can't replace experience," he added. "We also had two youngsters in the team in Rhys Webb and Tom Isaacs and they will learn from the experience of beating one of the best teams ever to have played the game. We're developing youngsters and it's a measure of our success that half of our players (eight out of 16) have gone on to play full international rugby," he added.
"We're quietly confident of doing well against Kenya, but they will be a difficult proposition. They are a very good side and actually topped their group, finishing ahead of South Africa.
"They are a very quick side but they are also surprisingly physical and they are a coming force in the game. They've down really well over the past couple of years so it should prove a tough test."
The fixtures for the New Zealand leg of the IRB World Sevens Series can be found by clicking the link at the bottom of this email.