The Alexander Turnbull Library was warned a historic painting was forgery, but bought it anyway.
The national heritage collector paid $75,000 at auction in 2013 for the portrait of a Maori man, identified as Hoani or Hamiora Maioha, signed G. Lindauer.
Czech artist Gottfried Lindauer, who lived between 1839-1926, was known for his accurate portraits of Maori subjects.
Before making the purchase, Victoria University colonial art expert Roger Blackley had told the library it was "strange" and a forgery.
But Turnbull's own experts thought the painting was genuine.
"We backed our own judgment in the face of an assessment from an external expert," chief librarian Chris Szekely said.
"Differing opinions are not uncommon in these matters, and in this instance we went with the library's in-house expertise. It is now evident that we were wrong."
The forgery was confirmed when Auckland Art gallery conservator Sarah Hillary inspected it this year as part of preparations for a book on Lindauer.
She found the painting contained titanium dioxide, which was not available when Lindauer was painting, and that the brushwork was rough compared with Lindauer's careful strokes.
The library was disappointed and police have been told, Mr Szekely said.
The painting has been removed from display while police investigate.
New Zealanders most famous forger, Karl Sim died in 2013. He had copied 62 artists including, Rembrandt, Van Gogh, Lindauer and Goldie.