The Distinguished Conduct Medal, awarded to Corporal Sergia Wesley Lockwood, was auctioned at Mowbray Collectables, in Wellington, last week.
"The medal to Sergia Lockwood sold for $1850, well above the estimate of $1200," Mowbray Collectables coins, banknotes and medals director David Galt said.
With the buyer premium, the total was $2206.
Mr Lockwood was born in Tasmania, and was a clerk when he enlisted in the Australian Army in 1914.
After the war, he returned to Australia, married, then emigrated to Dunedin.
During World War 2, he enrolled in the New Zealand Army as a second lieutenant and was posted to the 4th Battalion in the National Military Reserve.
Mr Galt said the medal was owned by prominent Otago military medal collector, the late Brian Connor, whose collection was auctioned along with those of other collectors.
Many of the Connor medals in the auction were awarded to Otago residents, and some of them dated back to the 19th century.