A skull has been chiseled into part of the headland at Waipipi Beach near South Taranaki in the country's north island.
Local media have reported fresh cuttings also lie at the base of the cliff.
The carving, which is two metres high and two metres wide, appeared in the last few weeks.
Hawera resident Rocky Steer said residents have speculated about its origins ever since.
"(We think) someone has backed their vehicle in and carved around the head to make it more prominent," Steer told 9News.com.au.
"The word on the street is that a local from Waverley may be the artist, however it's just a rumour at this stage.
"It's been there for some time."
South Taranaki District Council planning and development manager Jess Sorensen told New Zealand public broadcaster RNZ she did not normally come across sculptures such as the the skull.
"This is an interesting one that we've never come across before," Sorensen said.
"Technically this does trigger the need for a consent under our district plan - so we'd like to encourage other artists to have a chat to us first about any large scale ideas within the coastal protection area."
