The opener missed a bouncer from fast bowler Corey Anderson. It hit him on the side of the head and his bat struck the stumps for a hit wicket dismissal.
Dazed by the blow, he fell to the ground before walking off.
Before the bizarre dismissal Shehzad had been shaping well, with 17 boundaries and a six in his 371-ball innings.
At the break Azhar Ali was unbeaten on 73 and Younis Khan had still to get off the mark. Pakistan added 78 in the morning session after resuming on 269-1. Shehzad and Ali had put on 169 for the second wicket.
The New Zealanders paid dearly for giving Shehzad a life on Sunday. He was on 16 when wicket-keeper B.J. Watling failed to stump him off the bowling of spinner Mark Craig.
Shehzad, 126 overnight, took some time to open up on Monday. But he then hit a straight six off Craig before running a three to surpass his previous best of 147 against Sri Lanka in Sharjah earlier this year.
Pakistan, who won the toss and opted to bat, lost just one wicket on Sunday, that of opener Mohammad Hafeez for 96.
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