MAF Biosecurity New Zealand has confirmed the presence of a new condition, known as Nor 98 or atypical scrapie, in a single sheep's brain from New Zealand.
It is the first time the brain condition, discovered only relatively recently in sheep and goats, has been found in an animal that was born and bred in New Zealand.
The agency says the condition is quite different from the classical form of scrapie, a brain-wasting disease that infects sheep and goats and the discovery does not affect this country's scrapie-free status.
Both forms of scrapie are not thought to pose any risk to human health or the safety of eating meat or animal products, and there is no evidence that the atypical form can be transmitted naturally to other animals or people.
Biosecurity NZ says the condition was first detected in European laboratories that were using 200 sheep's brains from New Zealand as a scientific control against testing for BSE, also known as mad cow disease.
Principal international adviser Stuart MacDiarmid says it is unlikely the condition would have been found if European scientists had not been testing thousands of brains for it.
Dr Mac Diarmid says it is thought to appear spontaneously in some types of older sheep.
The Food Safety Authority does not think there are likely to be any major trade repercussions from the discovery.
So far, the condition has also been found only in European countries, the United States, Canada and the Falkland Islands.