Grace Wisnewski of the Hamilton Wanderers scored both goals at the stadium in Montevideo this morning (NZ time) and was awarded player of the match.
Wisnewski's first goal came after just 15 seconds, the quickest goal in FIFA under-17 World Cup finals history. She added a second after 13 minutes.
Wisnewski also hit the goal post in the second half.
Canada had 62% of possession and had 22 shots at goal compared to New Zealand's nine.
New Zealand coach Leon Birnie was very proud of his side.
"Who would have thought, we came over here, we had a dream we got out of the group, created history for the first time ...then got into the semi-finals, created more history and now we've just got a bronze medal at a World Cup, like how good are these players.
"It was a great performance, I thought first half we were really good, second half it was just pure determination and drive to hang in there and get that medal."
The team became the first from New Zealand to advance past the first knockout stage at a FIFA tournament.
In five previous appearances at the under 17 tournament New Zealand had never finished higher than 12th.
Spain will meet Mexico in the final.