Update: 3:44PM New Zealand were spun in knots by Sri Lanka to lose by 59 runs and crash out of the World Twenty20 tournament in Bangladesh.
Left-arm spinner Rangana Herath took remarkable figures of 5-3 to dismiss the Black Caps for their lowest Twenty20 score of 60 in just 15.3 overs in Chittagong.
Sri Lanka, who were earlier dismissed for 119, advance to the semi-finals alongside South Africa. New Zealand lost to both of those sides to finish third in their group, in front of England and the Netherlands.
After reaching the semi-finals of the first World Twenty20 in 2007, New Zealand have failed to do so in the four subsequent tournaments.
Their batting capitulated in the face of world-class bowling from Herath, who capitalised on helpful conditions and an uncertain approach from the Black Caps.
His impact was instant, claiming three key scalps before he had conceded a run after opener Martin Guptill was run out for five.
Herath removed New Zealand's two best batsmen, Brendon McCullum and Ross Taylor, without scoring before snaring Jimmy Neesham first ball.
McCullum played out four dot balls from Herath before being stumped while Taylor was trapped LBW and Neesham was bowled by the 36-year-old.
The Black Caps were 23-3 and unable to call on the batting of allrounder Corey Anderson, who dislocated a finger while fielding.
Wickets continued to tumble regularly, with opener Kane Williamson's innings of 42 off 43 balls the only score greater than five.
Williamson's wicket was the second-last to fall before Herath returned to dismiss Trent Boult and complete the second-best bowling figures in Twenty20 cricket.
The record of 6-8 is held by spinner Ajantha Mendis, whose mixed form at this tournament saw him replaced by Herath for Monday's game.
New Zealand's total was the third lowest in all T20 internationals after innings scored by Associate nations the Netherlands (39) and Kenya (56).
Their previous lowest score was 80, against Pakistan at Auckland two years ago.
Earlier, seam bowlers Boult (3-20) and Neesham (3-22) took three wickets each in an impressive bowling performance after Sri Lanka were sent in.
Mahela Jayawardene, who top-scored with a 32-ball 25, added 30 for the fourth wicket with Lahiru Thirimanne (20).
Sri Lanka will play the winners of Tuesday's game in group two between defending champions the West Indies and Pakistan.
The other semi-final pits unbeaten India against South Africa.
The final will be played in Dhaka on Sunday.