Australia have dominated New Zealand in recent times, winning seven of eight clashes since the start of 2018.
But the Silver Ferns are a new-look unit and refused to give up after being down by as many as nine goals at one point.
Coach Noeline Taurua started with her strongest line-up, with Maria Folau at GS and Ameliaranne Ekenasio at GA.
It was fairly evenly poised early on but the Diamonds ended the first quarter with a burst, leading 13-10 at the first break.
GK Courtenay Bruce was breathing down the neck of the New Zealand shooters and forced a few turnovers.
In contrast the Australian front line found it easier to work the ball into their shooters - Caitlin Bassett and Steph Wood.
Folau was carrying a big shooting load, while Ekenasio had only put up 5 goals before Taurua brought Bailey Mes on at GS just before the half-time break.
At the main break the Diamonds had extended their lead 28-22.
Taurua's changes, including bringing Shannon Saunders on at WA for Gina Crampton, worked a treat.
With Mes and Folau in the shooting circle it was the same combination used at the 2015 World Cup.
Saunders started finding more space as the game wore on and the Ferns clawed their way back into the contest.
Casey Kopua, who amazingly hasn't faced Bassett since October 2015, started getting some crucial balls.
New Zealand got back within four at the final change, 40-36.
Taurua continued to play around with substitutions, reintroducing Ekenasio to the game, who made amends for her slow start by really injecting herself into the game.
Only Pheonix Karaka and Te Paea Selby-Rickit remained on the bench.
New Zealand closed in on the Diamonds and Jane Watson came up with a brilliant intercept in one of the final plays of the game.
Folau had a chance to equalise with time up but missed the shot.
Despite the loss, the Silver Ferns made a statement pushing the defending champions to within one, and the other semi-finalists will be on notice.