Ireland came within nine minutes of a first win over New Zealand before the All Blacks claimed victory in Hamilton.
The Irish conceded a first-minute try to Doug Howlett but led 16-8 at the break via Brian O'Driscoll's converted try and three Ronan O'Gara penalties.
Mils Muliaina scored on the resumption but Andrew Trimble crossed to give the visitors a 23-15 advantage.
But three Luke McAlister penalties put New Zealand ahead and Troy Flavell's late try sealed victory for the hosts.
McAlister added another penalty to put the match beyond Ireland, who had hooker Jerry Flannery yellow-carded late on for a late shoulder charge on Muliaina.
But they will take heart from how close they pushed the world's number one team ahead of next week's second Test in Auckland.
Ireland's hopes of a first ever victory over the All Blacks in 101 years took an immediate dent as the hosts scored from the kick-off.
Full-back Mils Muliaina surged through a flimsy O'Gara tackle and handed onto Aaron Mauger. The inside centre sprinted deep into Irish territory before passing to the lightning Howlett, who held off Andrew Trimble's despairing dive to score in the corner.
Luke McAlister narrowly missed the conversion from wide out, and was also off target with a penalty after another series of attacks forced the Irish offside in midfield.
O'Driscoll's try bolstered Ireland
But the visitors refused to be cowed, and hit back with a smartly-taken try after 11 minutes.
Quick ball from a scrum reached centre Gordon D'Arcy, whose inviting pass was seized on by O'Driscoll, cutting inside Joe Rokocoko and Ma'a Nonu to touch down under the posts.
O'Gara converted and moments later added a penalty to put Ireland 10-5 up.
McAlister did find his kicking boots to knock one over after 25 minutes, but Ireland's defence frustrated the All Blacks, typified by a try-saving tackle by Peter Stringer on Rokocoko.
Under pressure at the scrummage, the Irish gained a bonus when debutant All Black loose-head Clarke Dermody conceded a needless penalty, O'Gara's kick extending the lead to 13-8.
The hosts lost scrum-half Byron Kelleher to injury, replaced by Jimmy Cowan, and Ireland went into the break in fine fettle as O'Gara landed another penalty with the last kick of the half.
The second half began in similar fashion to the first, with New Zealand blasting through for another clinical try.
McAlister's initial dent saw Rokocoko, Nonu and Mauger combine before Muliaina finished the move, McAlister's conversion bringing them to within a point at 15-16.
But again Ireland hit back, working the ball through a series of phases before O'Gara's overhead pass sent Trimble skating in on the left, O'Gara's conversion swelling the visitors' belief.
McAlister pegged back the deficit to two points with two quick-fire penalties before the hour, but Ireland still led going into the final quarter.
O'Gara's aim failed him for the first time with 15 minutes left as a further penalty chance went begging.
Instead McAlister banged over his fourth in the 71st minute to regain the lead before the decisive play, Muliaina intercepting a Paul O'Connell pass with Ireland on the attack.
New Zealand surged upfield and Nonu broke through Stringer's tackle before putting a delighted Flavell over.
New Zealand: Muliaina; Howlett, Nonu, Mauger, Rokocoko; McAlister, Kelleher; Dermody, Mealamu, Hayman; Jack, Rawlinson, Holah, McCaw (captain), So'oialo.
Replacements: Cowan (for Kelleher, 36), Kaino for Holah (46), Flavell for Rawlinson (55),
Tialata for Dermody (71).
Not used: Hamilton, Hill, Oliver.
Ireland: G Murphy; Horgan, B O'Driscoll (capt), D'Arcy, Trimble; O'Gara, Stringer; Horan, Flannery, Hayes; O'Callaghan, O'Connell; N Best, Wallace, Leamy.
Replacements: Gleeson (for Wallace, 60), Dempsey for Murphy (73), M O'Driscoll for N Best (73).
Not used: R Best, Young, Boss, Hickie.
Sin-bin: Flannery (79)
Referee: Stuart Dickinson (Australia).