The Black Caps were sent in by Sri Lankan skipper Angelo Mathews and battled to 88-3, before another monster Brendon McCullum innings - he made 195 off 134 deliveries - put the hosts on top.
Jimmy Neesham also contributed more than handily - making 85 off 80, and putting on 153 for the fifth wicket with captain McCullum
McCullum struck 18 fours and 11 sixes in a record-breaking century - he broke his own mark for the fastest Test ton by a Kiwi, reaching three figures in 74 deliveries.
The effort beat his previous best by three balls, after his 78-ball century against Pakistan in Sharjah in November.
The first day of Test cricket in the South Island city in eight years had it all - and the drama began early in what was the first Test hosted at Hagley Oval.
Suranga Lakmal (1-83) and Shaminda Eranga (1-82) both had false starts on their opening deliveries - the pair slipping in identical fashion as they approached the crease.
They would both recover to strike inside the first 20 overs - Lakmal beating Hamish Rutherford (18) with an inswinger that knocked his off-stump out of the ground.
Eranga had Rutherford's fellow opener Tom Latham (27) caught at point by debutant spinner Tharindu Kaushal.
Kaushal Silva then capitalised on a mix-up between Ross Taylor (seven) and Kane Williamson, running out the former with a direct hit to put the tourists on top.
However, the wicket brought McCullum to the crease - and the wicket-keeper produced a swashbuckling innings to put the Test significantly in the hosts favour.
When McCullum came to the crease, his partner Williamson was on 34 - but McCullum beat him to a half-century, surpassing 1000 runs for the calendar year in the process.
Williamson's form tapered as McCullum's improved, as the skipper brought up his ton in anti-climatic fashion.
McCullum survived an lbw review by the Sri Lankans, with replays showing he got an inside edge to a Kaushal delivery - however the field umpire's decision to award two leg byes stood.
While McCullum thought his score had moved to 95, he was still on 93 - and he celebrated wildly after launching the next delivery for six.
However, it took him just one more ball to actually reach three figures for the fourth time this year - his other scores being 224, 302 and 202.
After McCullum got his ton, Williamson (54) departed but Sri Lanka would continue to face the brunt of the Kiwis' batting.
McCullum and Neesham put on the third-fastest 150-plus partnership in Tests, their stand seeing them go at 7.84 runs per over.
The NZ skipper fell short of reaching 200 for a fourth time this year, as Kaushal (1-159 off 22 overs) snared his first Test wicket.
Mathews (2-34) picked up the wickets of Neesham and BJ Watling (26) late, but the day's honours belonged to NZ and McCullum as they took control of the series opener.