Super Six, Port Elizabeth: Australia 208-9 (50 overs) beat New Zealand 112 (30.1 overs) by 96 runs.
Australia recovered from a poor batting display to skittle New Zealand and pull off an unlikely win at St George's Park.
Shane Bond took career-best figures of 6-23 to leave Australia reeling at 84-7, but Michael Bevan and Andy Bichel both scored half centuries to enable their side to reach a respectable total.
The Kiwis went into the mid-match break with a semi-final spot theirs for the taking, but their confidence was misplaced as Brett Lee took five wickets and Glenn McGrath three.
Having thrown away early wickets with some loose shots, New Zealand's end came swiftly as Lee tore through the tail with a devastating burst.
The win guaranteed Australia top spot in the Super Six table while the Kiwis must now beat India to guarantee progress to the semis.
Australia started badly after losing the toss when Bond had Matthew Hayden caught by wicketkeeper Brendon McCullum and trapped Adam Gilchrist lbw.
Captain Ricky Ponting became Bond's third victim when he slashed a short delivery to Fleming at first slip and Andre Adams got into the act as Darren Lehmann edged to Nathan Astle at gully.
Damien Martyn and Bevan stopped the rot with a patient stand of 33, but Bond returned to take two wickets in successive balls.
Ian Harvey survived the hat-trick ball by a whisker, only to lose his middle stump soon after playing across the line of a straight Bond delivery.
But New Zealand looked short of penetration when Bond, who was also the scourge of the Australian batsmen in the 2001/2 VB Series, had finished his inspired spell.
Bichel joined Bevan (56) to put on 97 on the same ground that the pair shared a match-winning partnership of 73 against England earlier in the tournament.
BOND'S RECORD V AUSTRALIA
6-23, Port Elizabeth
Bichel was felled when an Adams beamer struck him on the helmet, but he recovered to hit a six and six fours in his 64, before falling tamely to a leading edge to midwicket.
Daniel Vettori was promoted to open the innings for New Zealand, but McGrath soon claimed his wicket and reduced the Kiwis to 33-3.
Stephen Fleming and Chris Cairns stemmed the flow of wickets before Cairns carelessly holed out to third man off the bowling of Bichel.
Lee delivered the hammer blow when Fleming tickled an attempted pull to Gilchrist for 48, to spark a spell of five wickets in 15 deliveries for the fast bowler.
The Australian paceman then dismissed Brendon McCullum and Jacob Oram in successive balls before clean bowling Adams.
And he wrapped up New Zealand's innings with his fifth wicket by pouching a return catch to dismiss Bond.