Michael Green had been high commissioner in Fiji since 2004
The interim government said "provisions remain open" for New Zealand to replace Michael Green as high commissioner.
But Wellington reacted with fury at the expulsion, and warned Fiji that there would be repercussions.
New Zealand was one of dozens of nations to strongly criticise last December's bloodless coup in Fiji.
It imposed sanctions following military leader Cmdr Frank Bainimarama's move to topple elected Prime Minister Laisenia Qarase and his government.
Media reports suggested Mr Green, who had been high commissioner in Fiji since December 2004, had upset the government by meeting members of the deposed government.
Diplomatic backlash
"The practice of quiet diplomacy was foremost given all the chances to prevail by Fiji authorities in our efforts to seek understanding and co-operation of... Mr Green to stop interfering in Fiji's domestic affairs, " the Fijian government statement said.
It also went on to say that Fiji's own diplomat in Wellington had "continuously been snubbed" by the New Zealand authorities, "and the attitude of his counterpart in Fiji has done little to help the situation".
Cmdr Bainimarama has been sensitive to foreign criticism of the coup
The statement ended by saying Fiji considered this a "purely bilateral matter", and should not have any implications for its relations with other countries.
New Zealand said it would now be assessing what next steps to take. It has already suspended military ties with Fiji and imposed travel bans on the new leadership since the coup in December.
Foreign Minister Winston Peters told the BBC that New Zealand was "looking at every aspect of our bilateral relations" and may impose measures as early as next week.
He said the action could involve issuing new travel advisories or putting a freeze on New Zealand bank accounts held by Fiji's leadership.
But he insisted aid would not be affected. "We regard the Fijian people as innocent in this matter. We would not want to act in a way that would seem to be a mirror image of the country we are dealing with, in terms of the government."
Cmdr Bainimarama said he had no choice in carrying out the coup on 5 December 2006 because Mr Qarase's government was corrupt.
He was also angered by a government plan to offer amnesties to those involved in a 2000 coup that he had helped put down.
But he has come under huge pressure from overseas since the coup, and lifted a state of emergency in the country at the end of last month.
Fiji and New Zealand are engaged in a game of diplomatic tit-fot-tat after expelling each other's High Commissioners.

This afternoon Fiji's military regime expelled acting New Zealand High Commissioner to Fiji Caroline McDonald.  The New Zealand government retaliated by expelling Fiji's High Commissioner to Wellington, Ponsami Chetty.  Both will be given a week to leave the country.

McDonald's expulsion was announced late this afternoon by Fiji's interim Attorney-General Aiyaz Sayed-Khaiyum, who said that it was "a direct result of McDonald's actions over the past year that have been contrary to the accepted international norms of diplomatic  behaviour".

The Fijian government has accused New Zealand and Australia of spying on Fiji, claiming they were tapping phone lines and listening in on members of the interim regime.

The New Zealand government has denied any "misbehaviour" by McDonald.

The round of diplomatic tit-for-tat was sparked by growing tensions between New Zealand and Fiji over sanctions put in place in the wake of the 2006 coup.  Members of the interim regime and their immediate families are barred from entering New Zealand.  Last week the Fijian regime threatened to expel New Zealand's High Commissioner unless the New Zealand government granted a visa to George Nacewa, the son of a senior regime official.  

But yesterday the interim regime apparently backed down on its threat, issuing a statement that it would not expel McDonald and announcing that it would establish a special team to improve relations between the two countries.

McDonald is the second New Zealand diplomat expelled by Fiji.  In June 2007 then-New Zealand High Commissioner Michael Green was expelled after being accused of interfering in the country's domestic affairs.

Last week ONE News Pacific Correspondent Barbara Dreaver was deported as she arrived to cover the crisis.

Fiji's military overthrew the country's elected government in a military coup in December 2006.