More than a quarter of a million animals were tested on for teaching and research in 2016 - a 13 percent jump from the year before.
The Ministry for Primary Industries has released its report into the use of animals for research, testing and teaching (RTT).
The report shows that while there was a 13 percent jump from the year earlier, the rolling three year average has increased by 4 percent.
Around 65 percent of those used in RTT were cattle and sheep, the report said.
New Zealand Anti-Vivisection Society executive director Tara Jackson said there are scientific issues with using animal models to predict human outcomes and other options should be explored.
"More researchers and scientists are coming out and saying that they wouldn't do animal based experiments because it isn't reliable," she said.
"We would like to see New Zealand following that trend."
In the report, MPI said the rise in numbers is due to an increase in the use of farm animals.
It also shows that more than 80 percent of the animals experienced no impact to their welfare and there was a drop in how many were highly affected.
But Ms Jackson said there is a lack of transparency around the grading system used for impact on welfare.
"It's very subjective. It's up to the individual researchers doing the experiments to say what kind of impact it has," she said.
"I don't take comfort in how many non-invasive experiments are done in New Zealand."
She said some low impact experiments could include observational experiments but high impact experiments can include forcing seizures on animals.
MPI said efforts to find the most humane methods of pest control, for instance, can carry a relatively high welfare cost.
"As an example, researchers may need to measure the length of time from ingestion of a poison until an animal is unconscious or dead in order to ascertain the efficiency or otherwise of that method of pest control," it said.
It notes that the Animal Ethics Committee (AEC) is required to carefully weigh the benefits of animal distress against improving the survivability of native wildlife populations.
"In addition, the AEC must be confident that researchers have fully addressed the Three Rs - replacement of animals with non-sentient or less sentient alternatives; reduction in animal numbers to the minimum required for statistical significance; and refinement of procedures to ensure the minimum possible impact on animal welfare."
Ms Jackson said thousands of live animals have been used for teaching purposes when there are other more humane options available.
"There are amazing plastic models, there's computer modelling methods where you could do the dissection virtually," she said.
"They would be more cost-effective in the long- run, less messy and would include all students."
Ms Jackson said there is still a lot of work to be done and she is urging researchers and the government to collaborate with animal rights groups to come up with alternative testing methods.
"It's not something we've left behind yet, unfortunately," she said.
Last week MPI announced its support for the rehoming of ex-lab animals following pressure from animal rights groups and a public petition.