More than 2 million people voted in the referendum, which pitted the current flag against the alternative blue and black Kyle Lockwood design.
The reasons for changing the flag included the fact that it featured the Union Jack - tied to the country's colonial history - and very closely resembled Australia's.
"I do think it is time we put a symbol on the flagpole that speaks more of the country we are, rather than where we've come from", Bob Parker, the former Christchurch mayor, told the New Zealand Herald.
Powerful cartoon that asks where people's sympathy was for TurkeyOthers said it was politically motivated and Prime Minister John Key just wanted to create a legacy.
Speaking to reporters in Auckland Airport after the vote, the PM said he respected New Zealand's choice.
After a multi-million dollar year-long referendum on changing the country's emblem, more than two million New Zealanders have flown the flag of democracy at its proudest - the New Zealand Flag is staying.
Key said he was disappointed by the result but not surprised.
Labour leader Andrew Little said the flag project had "divided the country" and "become a personal crusade".
The Prime Minister kicked off the flag referendum process in March 2014.
Miami Traffic 7th Worst In Nation
Nobody's rushing, because nobody can move in the bumper-to-bumper, standstill traffic that occurs during these commuting hours. Belfast and Dublin have been named the 6th and 7th most congested cities in Europe .
Mr Key says the conversation about nationhood and what New Zealanders stand for that was sparked by the referendum process has been an important one.
It's been a good conversation to have - voter turn-out of 2,119, 953 shows how deeply passionate New Zealanders are about their national identity. Crucially armed forces veterans in the Returned and Services Association - the equivalent of the Royal British Legion - were against change.
Key said he did not intend to again campaign for a new flag while he remained prime minister.
"At every stage of the process John Key screwed the scrum in favour of his flag".
Polls had suggested most wanted to keep the current flag.
New Zealand may feel far away, but when it comes to democratic rights for its people, it is a pioneer.
A final result will be announced in about a week's time.
He also under estimated the leg up it would give to NZ First leader Winston Peters, whose positioning has caused deep disquiet among National backbenchers in heartland seats.
Preliminary results from the historic second referendum have been released and it shows a majority were against change.