The movie will be shot at Duffers Saddle, near Cromwell.
Photos have circulated over the past week of film sets, which include military installations.
It is not Cruise's first time in New Zealand. The actor previously visited the country in 2002 during filming of The Last Samurai.
That was 15 years ago, but many may remember how thoroughly he charmed the beachside city.
While there he famously helped a stranger stranded on a country road, by changing their tyre.
He also became a fan of local fast food, and was flashed by women when his helicopter flew overhead.
"I'm going to miss the fish and chips, we're going to miss our Friday night McDonald's, you know, we are going to miss the beach at night," he told media at the time, before boarding his private jet to leave.
While promoting his latest film The Mummy he told reporters he was looking forward to returning to New Zealand.
He said he'd told the cast and crew to prepare for a treat.
Cruise is expected to be in Queenstown for about a month.
Queenstown mayor Jim Boult said Mission: Impossible 6 was the second big budget film in the area this year.
"Those in the industry tell me it's a good spot because of the low population, and of course the beautiful scenery.
"I didn't realise it was for a scene set in Iraq, though.
"I guess that just shows how versatile we can be. It'll be good to see the final result in the cinema."
Boult said he had been warned the stars were coming into town, but they'd left any extra security arrangements to the movie producers.
He said Tom Cruise and his co-stars would be welcomed to the area, like all guests were.
"I'd recommend he sample our restaurants, and the local wine.
"By all accounts he likes a bit of adventure, so there's plenty for him there.
"I look forward to running into him in the supermarket."
This latest Mission: Impossible instalment will follow the exploits of Cruise's super spy Ethan Hunt, and will also shoot in Paris and London, Skydance Media CEO David Ellison was reported as saying at SXSW.
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The series is known for its outlandish stunt sequences, but Ellison said the sixth instalment would be "mind-blowing".
"What Tom is doing in this movie I believe will top anything that's come before. It is absolutely unbelievable - he's been training for a year," he said.
"It is going to be, I believe, the most impressive and unbelievable thing that Tom Cruise has done in a movie, and he has been working on it since right after Rogue Nation came out.
"It's gonna be mind-blowing."
The film will be directed by Christopher McQuarrie, who also did the fifth instalment, Rogue Nation. It's also set to star Rebecca Ferguson, Simon Pegg, Ving Rhames, Alec Baldwin, Sean Harris and Henry Cavill.
Mission: Impossible 6 is scheduled for release on July 27, 2018.
