The Environmental Protection Authority said it will ban long-lasting substances perfluoroalkyl and polyfluoroalkyl -- known as PFAS or "forever chemicals" -- by 2027.
Found in items like nail polish, shaving cream, foundation, lipstick and mascara, PFAS make products more durable, spreadable and water-resistant.
They are virtually indestructible, but can build up in the body over time and studies have linked them to cancer, infertility and environmental damage.
"Our concern is they don't break down, either in the body or the environment," Shaun Presow from the Environmental Protection Authority told AFP on Wednesday.
"As they accumulate, they have been linked to a range of harmful effects, like some cancers and hormonal issues."
The cosmetics industry has until December 31, 2026 to phase out the use of the chemicals.
New Zealand will also ban the use of PFAS in firefighting foams from December 2025.
Some US states have adopted policies protecting people from PFAS and the European Union is mulling a ban, but Presow says New Zealand is among the first banning them from cosmetics.
"We're one of the first countries to do it, we haven't seen many others yet," he added.
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