Veterans Affairs Minister Meka Whaitiri has walked from the government, confirming her switch on Wednesday morning at Waipatu marae in Hastings.
Ms Whaitiri, a Labour MP for 10 years, said she was being "called home" by her responsibility to Maori.
"The decision to cross the floor is not an easy one, but it's the right one," she said, taking deep breaths and suppressing emotions during her speech.
Prime Minister Chris Hipkins was blind-sighted by the news, which broke as he was travelling to the UK for the King's coronation.
Upon landing, he said he had no prior warning of Ms Whaitiri's intentions.
"It's not been raised with me. I've not had any conversations with Meka about it. She's not really raised any concerns with me, either," he told Radio NZ in London.
"I've left a message for Meka. I would expect if there was anything significant happening in that area that she would give me a call."
Ms Whaitiri has been the MP for Ikaroa-Rawhiti since a by-election in 2013, increasing her vote at the three elections since.
Ikaroa-Rawhiti takes in the east coast of North Island, including many of the communities hardest hit by Cyclone Gabrielle.
Ms Whaitiri signalled her intention to sit as a Maori Party MP for the balance of this parliamentary term and stand for the party in October.
The 58-year-old said she was joining an "unapologetic Maori political movement to achieve what was promised to us 183 years ago", a reference to the signing of the Treaty of Waitangi.
Her defection will give Labour a political headache, with Opposition Leader Chris Luxon saying the government was "falling apart".
It also boosts the Maori Party, which current polls show would hold the balance of power in the next parliament, meaning it could decide the next government in coalition talks.
The party's current MPs, co-leaders Debbie Ngarewa-Packer and Rawiri Waititi, have not outlined whether they would support a Labour or National-led government.
"We haven't made a choice of who we would go with and deliberately," Ms Ngarewa-Packer said in March.
"It's really important that we ... hold (true) to our values and our kaupapa (purpose) and that we leverage our power or influence as we think is best."
Ms Ngarewa-Packer said the defection was a "turning point" for the party.
The Maori Party was formed in 2004 when Labour MP Tariana Turia revolted during a divisive debate about Maori ownership claims over the foreshore and seabed.
It supports indigenous rights, arguing for the full expression of the Treaty of Waitangi, New Zealand's foundational document signed in 1840.
Despite having more in common with Labour, the left-wing party supported the centre-right National Party during John Key's three terms as prime minister.
Ms Whaitiri, who began her working life as a shearer before becoming a public servant and Maori business leader, is also a former national-level netballer and softballer.
She was made customs minister by Jacinda Ardern in 2017 when Labour came to office but was dumped in 2018 after allegations she assaulted a staff member in her office.
Ms Whaitiri returned as a minister after Labour's 2020 election win but was passed over by both Ms Ardern and, this year, Mr Hipkins for a cabinet post.
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