The ban on new offshore oil and gas permits is effective immediately, but will not affect existing permits or onshore exploration in the energy-rich Taranaki region over the next three years.
"There are 31 oil and gas exploration permits now active, 22 are offshore".
The Government had to start preparing communities and industry for a transition to make sure "jobs that are there today will remain tomorrow", she said.
She said she saw the impact of climate change first-hand last month when she visited the cyclone-ravaged Pacific island nations of Samoa and Tonga.
Earlier, New Plymouth's Mayor Neil Holdom called the decision a "kick in the guts for the long-term future of Taranaki's economy".
"We're striking the right balance for New Zealand-we're protecting existing industry and protecting future generations from climate change", she said.
We also believe that we should have the strictest compliance and regulatory standards used in the hydrocarbon industry to keep the operators in check. That has a lot more emissions.
"We have the highest GDP in the country per capita - it's concerning the government has made this announcement without a plan. or if they have one we haven't seen it".
Chief executive Cameron Madgwick said a well-managed trading scheme was the way to reduce New Zealand's emissions, not "arbitrarily banning" certain fuel types. However, another two thirds national energy use is industrial and transport related, for which complete renewable alternatives are not now economically viable.
He also said it was an issue of energy security.
But Ms Ardern said no-one would be losing their job as a result of the move.
The lifestyle in Taranaki, which has been a model for the country and the world, is largely owing to the benefits derived from the hydrocarbon industry.
"This is another step on our transition away from fossil fuels and away form a carbon neutral economy", Ms Ardern said, while acknowledging this announcement alone would not be enough to combat climate change.
Greenpeace director Russel Norman told Morning Report it was a huge win for the climate.
But New Zealand National Party MP Jonathan Young described the move as "economic vandalism".
"We need to work with industry, with businesses, with community groups and with individuals around the country to ensure this transition protects jobs, supports communities, and leads us to a better, fairer future".
"I say to my provincial neighbours, think back to Rogernomics when change was imposed upon people such as my father and they were powerless to deal with it".
"People are putting pressure all around the planet now, because we understand the global problem".
For years Māori have fought against major worldwide oil companies, with 31 active oil and gas permits in the country now, the last of those is set to end in 2030.
The decision under Labour Prime Minister Jacinda Ardern is a change in direction after nine years of conservative leadership which favoured expanding the industry.