Australian authorities say they recovered a street value of NZ$327 million.
Six people were arrested in the covert midnight operation, including four Australian nationals, one New Zealander and a Swiss national.
It was the second major drug bust in Australia in recent months, after police seized 500kg of cocaine in a Sydney Fish Market on Christmas Day.
According to the Australian Federal Police (AFP), the bust is the biggest ever intercepted by Australian authorities.
The boat's owner has been charged and will reappear in a Sydney court next week.
Officers intercepted a yacht off the NSW coast last week and seized what they described as a "significant" amount of cocaine.
It Would Appear That Donald Trump Doesn't Know Who Frederick Douglass Is
Some took his comments as suggesting 19th-century abolitionist leader Frederick Douglass was still alive. Douglass was born a slave, and became an orator and a leading figure in the anti-slavery movement.
The maximum penalty for this offence is life imprisonment or 7500 penalty units or both.
"It also highlights the importance of our close working relationships with our local and internal law enforcement partners - without which this operation could not have succeeded", said Gaughan.
Australian Federal Police recovered 1.4 tonnes of cocaine, worth an estimated £192 million ($312 AU), Justice Minister Michael Keenan told reporters.
The drugs were destined for Australia, but authorities feared some may have entered New Zealand, Customs' deputy comptroller operations Bill Perry said.
"This seizure is testament to the strong partnerships and cooperation between New Zealand, Australia and Pacific nations focused on combating drug smuggling operations in the region", he said.
The vessel was put under surveillance and tracked around the Australian coastline before it was boarded on December 12.
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