A spokesman for NZ Internal Affairs Minister Peter Dunne said Internal Affairs had advised Dunne of it after queries about Joyce's status from Australian media.
That was confirmed by the Crown Law Office and Joyce was advised by New Zealand's High Commission in Australia as he revealed this morning.
Joyce told Australia's lower house he would remain in his position until the matter was resolved.
He said he was shocked to learn he could be a citizen of New Zealand by descent via his father.
"Last Thursday afternoon the New Zealand High Commission contacted me to advise that on the basis of preliminary advice from their department of internal affairs which had received inquiries from the New Zealand Labor Party they considered that I may be a citizen by descent of New Zealand," Joyce told Parliament.
"Needless to say I was shocked to receive this information. I have always been an Australian citizen, born in Tamworth, just as my mother and my great-grandmother was born there 100 years earlier.
"Neither I, nor my parents, have ever had any reason to believe that I may be a citizen of any other country."
The Government holds a one seat majority in the House of Representatives and if Joyce were disqualified from being able to sit in Parliament, the government would lose its majority.
Joyce's father James Joyce was born in Dunedin before moving to Australia.
Joyce said the government believed, based on advice from the Solicitor General, that he would not be disqualified from serving as the Member for New England.
It comes after two Greens MPs resigned over holding dual citizenship, and Nationals MP and Cabinet Minister Matt Canavan and One Nation Senator Malcolm Roberts were referred to the High Court.
Joyce's citizenship was courtesy of his New Zealand father, although Joyce was not born in New Zealand.
Under citizenship laws, between 1948 and 1978 anyone born to a New Zealander father was automatically a citizen by descent and would have to renounce it to remove that status.
Since 1978 it has applied to anyone whose mother or father was a New Zealander.
The citizenship does not pass down to their children.
- Additional reporting by NZ Herald political staff.