Brazil built on their halftime lead in the 53rd minute when Sandro arrived at the back post to tap in Marcelo's free kick but were forced to play the last 15 minutes with 10 men following a pair of quickfire yellow cards to Alex Sandro, the second for a dive in the box.
New Zealand threw numbers forward with Michael McGlinchey having a close range shot deflected over the bar and Ryan Nelsen firing in a left foot volley from a tight angle that was cut out by a defender before it became too dangerous but the Brazilians were good enough to close out the game.
"To be honest it was very difficult for us going into this game knowing that we needed to win against a top, top team," New Zealand coach Neil Emblen said.
"They're just fantastic. We're on the bench admiring the way that they're playing, their movement and one thing you don't talk about these players is their work rate. The way they work out of possession is just great for our lads to see that the best players are not just the best technically they work the hardest as well.
"We've been beaten by a fantastic football team that I think will be gold medallists.
"The frightening thing was we played our best spell of football in the first half then bang, bang we're two nil down. We played a couple of moves through the pitch that were of Brazil standard and then they land a sucker punch and score. All of a sudden their fullbacks are playing with freedom, they're basically playing two at the back, we're chasing the game can't get out."
Reflecting on the campaign, Emblen said the Belarus game in which they outplayed the Europeans but lost 1-0 was a crucial opportunity missed, but praised his team's spirit and the leadership of its captain, Ryan Nelsen.
"We're disappointed with the Belarus result because I thought we did enough to win that game and if that had gone our way we'd be sitting on four points and going into the final game second in our group and under much less pressure.
"All tournament we've shown resilience and good kiwi spirit, and that's obviously led by our captain who leads by example and glues the team together defensively at times. He's an awesome presence in the group."
The Football Ferns Olympic campaign continues on Saturday morning (NZT) when they meet defending Olympic Champions USA in Newcastle.
Brazil 3 (Danilo 23', Leandro Damiao 29', Sandro 52') New Zealand 0
HT: 2-0
