Despite leading at half time, England went down 28-27 in Dunedin after being on the receiving end of a second half blitz from the clinical New Zealand backs on Saturday.
A 10-6 lead at half time for the tourists shook the World Champions into life with three second half tries to give them an unassailable two nil lead in the Test Series.
Second half scores from Ben Smith, Julian Savea and Ma'a Nonu showed the true power in the All Blacks' line up and at times the English struggled to hold possession and territory against the relentless tide of the hosts' attacks.
But England saved plenty of pride following a brave late comeback and tries from Mike Brown and Chris Ashton adding to an early Marland Yarde try with 12 points from the boot of Owen Farrell.
England started brightly at the Forsyth Barr Stadium, and as an early chance looked to be going begging, Marland Yarde picked a neat line off Danny Care to power past Richie McCaw and stretch over, adding to an early Farrell penalty.
New Zealand gained a foothold and Aaron Cruden added a pair of penalties himself but England will clearly rue the inability to finish off a score at the end of the first period as Manu Tuilagi, playing on the wing, was superbly snagged by Ben Smith when a score looked certain.
The All Blacks then made the tourists pay for that mistake by running in a trio of scores in a breathtaking half hour.
First, with Tom Wood picking a neat inside line, Billy Twelvetrees' break and offload found the floor, and from the turnover, the All Blacks spread the ball wide, and as Cruden dummied his way through the line, Savea found his full back Smith who cantered home under the posts.
Then it was Savea himself who got on the scoresheet as the All Blacks moved the ball wide and neatly converted an overlap to slide over in the corner.
Ma'a Nonu then dived over with the English defence getting increasingly stretched to put the hosts 18 points ahead, a far cry from England's early 10 point lead.
As England's much lauded cavalry arrived, the game was stretched and Twelvetrees fed Mike Brown who powered his way over to score despite the attentions of Corey Jane.
The final shout went to the English who in added time, worked a neat overlap to give replacement Chris Ashton the score under the posts, but the comeback probably came five minutes late.
With a midweek clash with Canterbury to look forward to this week, England will be looking for their first win on tour with Gloucester's Henry Trinder, Matt Kvesic and today's unused replacement Freddie Burns hoping to be involved.
Speaking to the local media this week, John Afoa described the hard work that the Cherry and White have been putting in and that he is fighting fit ready for Saturday's European Rugby Challenge Cup semi final clash with Exeter Chiefs.
Gloucester Rugby face Exeter Chiefs this Saturday in the European Rugby Challenge Cup semi-final, and Charlie Sharples, who starts at full back is relishing the challenge of the big Kingsholm occasion.
Gloucester meet the Exeter Chiefs for the fourth time in competitive action this weekend, this time in the semi-final of the European Rugby Challenge Cup. Director of Rugby David Humphreys told the local media this week that this is the sort of game that Gloucester want to be involved in on a regular basis and that he and his team are looking forward to it.
Following the 29-26 loss to Harlequins, club captain Billy Twelvetrees spoke of his disappointment that the Cherry and Whites were unable to cash in on the home side's indiscipline and lose a lead on Saturday afternoon.
Number eight Gareth Evans admitted to a collective feeling of frustration as Gloucester lost narrowly at Harlequins on Saturday, but insisted that there are plenty of positives to draw upon ahead of next Saturday's European Rugby Challenge Cup semi-final at home to Exeter.
Gloucester travel to the Stoop on Saturday afternoon to take on Harlequins in the Aviva Premiership. The Cherry and Whites make just two changes from last weekend's win over Connacht as they seek consistency and continuity in their play as Nick Walshe told the local media this week.
Gloucester Rugby qualified for their first European final since 2006 as they defeated the in-form Exeter Chiefs by 30 points to 19 in a thrilling semi-final at Kingsholm on Saturday evening. The club photographer caught the best of the action.
Recent meetings between these two teams have often been thrillers, and this was no exception. It went down to the final few minutes, but Gloucester produced the goods when it mattered to qualify for the European Rugby Challenge Cup Final, beating Exeter 30-19.
Supporters who are still to purchase tickets for Saturday's European Rugby Challenge Cup semi-final at home to Exeter Chiefs at Kingsholm (kick off 7:45pm) are reminded that Early Bird prices are only valid until 6:30pm on Thursday evening.