Having impressed on the opening day while missing regular captain Ben Stokes, England surrendered their advantage through a combination of tactical missteps in the field, a costly dropped catch and a superb maiden Test century from Glenn Phillips.
Resuming on 291-7, New Zealand extended their first-innings total to 391. Phillips, who had ended day one unbeaten on 49, reached three figures for the first time in Test cricket, receiving valuable support from Kyle Jamieson. The pair added 87 runs, with Jamieson contributing 41 despite being struck on the helmet twice during their stand.
England's frustrations began early when a short-ball strategy against Phillips and Jamieson backfired. Jamieson was also reprieved on 15 when Shoaib Bashir spilled a chance at deep mid-wicket.
Jofra Archer was surprisingly held back for the opening 90 minutes, including after the second new ball became available, but struck with his fourth delivery when eventually introduced.
Archer later removed Matt Henry, while Jacob Bethell dismissed Jamieson. Phillips finally reached his landmark with a single off Archer before England wrapped up the final two wickets within five balls.
England's reply suffered an early setback when Ben Duckett was run out for 36 following a misguided call from debutant Gay. Gay recovered to post his second fifty in consecutive Tests, sharing a 74-run partnership with Joe Root before falling to a reviewed catch behind off Will O'Rourke.
Root made 46 but was controversially trapped lbw by Henry, finishing just two runs short of 14,000 Test runs. Harry Brook added 24 before also falling lbw to Henry. Debutants James Rew and Jordan Cox were unable to provide lasting resistance, although Rew survived one chance when Rachin Ravindra dropped him.
A hostile late spell from O'Rourke further damaged England, who slipped to 177-5 before ending the day on 222-6. Rew's dismissal shortly before stumps exposed the lower order, with Cox unbeaten on 22 and Archer yet to score. England trail by 169 runs heading into day three.
Jos Buttler has been retained in England's squad for the five-match T20I series against India while James Coles has earned his maiden international call up in an enlarged 17-man group.
Matt Henry says his job is to be effective and not "look like a hero" after bowling New Zealand to victory in the second Test against England at the Oval to level the three-match series at 1-1.
Ben Stokes and Gus Atkinson have been cleared to return to England's squad for the third and deciding Test against New Zealand, after both players received written warnings following an investigation into a breach of team protocol.
New Zealand claimed a dominant 253-run win in the second Test against England to take the series to 1-1 ahead of the deciding game in Nottingham.
