The hosts 24-17 with two minutes left before Rieko Ioane crossed for two tries in the dying moments to seal a 27-24 fightback win.
The result lifts the New Zealanders to level on points with Fiji and South Africa at the top of the World Series standings after four events.
The new look team will change again for the next leg in Las Vegas with the Super Rugby players such as Ardie Savea and Akira and Reiko Ioane returning to their Super Rugby sides.
A gutsy Australia looked set to win their first world series tournament in four years before the New Zealand comeback.
Ioane finished with a hat-trick in a superb man-of-the-match performance, but the Australians made some late errors.
The most telling was when Henry Speight was caught high in contact when Australia had the ball, and a two-point lead, with five seconds left.
The ensuing scrum from the maul gave New Zealand the chance to steal the match.
Australia started brightly with Henry Hutchison opening the scoring after a Cameron Clark bust.
But the All Black Sevens showed their power with a 90m counter-attacking try where Akira Ioane gave Hutchison a vicious fend before handing off to brother Rieko.
Sonny Bill Williams started the final but did his side no favours with a high tackle which he was yellow-carded for, allowing the Thunderbolts to strike with a second to Hutchison just before the break.
New Zealand still managed to tie the scores at halftime thanks to a sideline burst by Kurt Baker from the kickoff.
Australia's painful defeat still didn't detract from the overall success of the inaugural Sydney tournament which reaped a total attendance of 73,313 over the weekend.