A naked man confronted two young girls and indecently assaulted one of them as they walked a short distance ahead of their families at a Coromandel beach on Saturday.
Police are searching for the man, who ran away when members of the public and family stepped in.
The 5-year-old and 7-year-old cousins were walking along the Riverview Rd Reserve at the northern end of Cooks Beach when they were approached by the naked man about 7.30pm.
The younger girl was indecently assaulted before the man fled in a silver hatchback car.
The two girls had been a short distance ahead of their family members as they walked back from the beach.
"It was then the girls were confronted by this naked man who indecently assaulted the five-year-old girl," Detective Inspector Chris Page said.
Police were now interviewing the family and girls to gather more information about the assault.
The offender has been described as a clean-shaven European with dark hair. He was carrying a red and yellow towel.
Police would like to hear from anyone in the area at the time who saw a man fitting his description.
Dave Gallaher, who owns local campground Cooks Beach Resort, said the beach had been "pumping" since about Christmas.
He said Cooks Beach was a safe place. "I have three small children from the ages of 5 to 13, and the two older ones, I let them walk around the streets late at night. Usually there's nobody here."
But when a small community was filled up with 15,000 to 20,000 people from out of town, "it's the same as anywhere", he said.
He thought the number of visitors to the area might have been slightly up this summer because of the good weather.
Most visitors came from Tauranga, Hamilton and Auckland, "but we get them from as far as Wellington", he said.
There was a big exodus from the area yesterday as people made their way back to work.
The Thames Coromandel District Council said just over 300 people permanently lived in Cooks Beach, according to the 2006 Census.