Reprimanded for failing to obey a call to order, he was thrown out of the chamber by house speaker David Carter.
Mr Carter said Mr Key had ignored several of his warnings: "He is to be treated no differently to any other in this house," Mr Carter said.
It is not the first time John Key has been thrown out of the chamber as PM.
Parliamentary records show he has been expelled on three other occasions while MP, the New Zealand news website Stuff reports.
Nor is he the first New Zealand prime minister to be ejected from the chamber: he follows in the footsteps of Helen Clark, in 2005, and before her, David Lange in both 1986 and 1987.
Being New Zealand's prime minister granted John Key no special favours during a heated parliamentary debate about the Panama Papers.