Nurse Josie Butler yelled "That's for raping our sovereignty" when she threw what appeared to be a large rubber penis at Steven Joyce's face.
She said it was a protest against the Trans Pacific Partnership (TPP) trade deal, signed in Auckland on Thursday.
Mr Butler was unhurt and later took to Twitter to make a joke of the incident.
Prime Minister John Key had pulled out of attending the event amid a row about New Zealand's role in the TPP.
New Zealand's national day marks the 1840 signing of the Treaty of Waitangi, which made New Zealand a part of the British Empire and guaranteed rights to the indigenous Maori population, although many were not fully respected.
Mr Joyce did not appear to be harmed by the missile, which hit him in the face as he was talking to reporters.
Ms Butler was taken away by police, but is reportedly now out of custody with no charges laid against her.
The minister himself appeared to take it in good humour, suggesting that a popular gif made of the incident be sent to the US Daily Show comedian John Oliver - known for making jokes about New Zealand - "so we can get it over with".
The demonstration also led to numerous humorous responses on social media, with some dubbing it #dildogate.
Prime ministers usually attend Waitangi Day events at the invitation of the Maori trustees of the Te Tii Marae land, on which the Waitangi Treaty was signed.
But Mr Key pulled out of attending on Thursday after the trustees told him he would not be allowed to discuss politics at the signing location.
The dispute centred on the TPP, a 12-nation trade pact which has angered many Maori who say it surrenders national sovereignty that should be guaranteed by the treaty.
Signing it days before Waitangi Day was also seen as insensitive.
Other activists have also criticised the deal for, they say, undermining environmental, social and other protections.
Ms Butler, who has campaigned against the deal, told media the TPP would increase the price of medicines and undermine public healthcare.