The St Bathans Fauna is a highly diverse non-marine vertebrate assemblage derived from the lower Miocene (19–16 Ma) Bannockburn Formation exposed in Central Otago, New Zealand. Deposited in palaeolake Manuherikia, remains of waterfowl dominate the avian assemblage, which, with eight known species in four genera, is one of the more diverse globally. Here we describe Manuherikia primadividua nov. sp., the fourth species in the genus. The stratigraphic distribution of fossils assignable to M. primadividua nov. sp. and a previously known species of Manuherikia, M. lacustrina, allow for the recognition of two distinct biozones within the Bannockburn Formation. Fossils of Manuherikia lacustrina are shown to be restricted to beds in the lower 26 m of the Bannockburn Formation in the Manuherikia River Section while fossils of the new species only occur in beds higher than 34 m in this section. This zonation allows correlation of the disparate sites in nearby Mata Creek with the stratigraphy in the Manuherikia River Section. This is the first such biostratigraphical zonation recognised in the fossil-bearing horizons at St Bathans; all other vertebrates have distributions spanning the stratigraphical range of both species. We tentatively correlate this vertebrate zonation with the previously identified pollen zonation, namely the Casuarinaceae Zone and its overlying Asteraceae-Chenopodiaceae or Chenopodipollis chenopodiaceoides Zone. This transition marks a relatively minor environmental change towards drier and more seasonal climates that appears to have driven the palaeoecological replacement of M. lacustrina by M. primadividua nov. sp. in palaeolake Manuherikia.