The incident was reported by an MPI observer who was on board the vessel at the time.
MPI acting director fisheries management, Steve Halley, said the move to prosecute sent a clear message to other commercial fishermen - to follow the rules.
"MPI works regularly with commercial fishers to reiterate the importance of bird mitigation and the need to comply with regulations designed to prevent seabird bycatch," he said.
"Non-compliance is not acceptable. If there is sufficient evidence, prosecution action will be taken. MPI is now moving to put in place further mitigation techniques including mandatory use of line-weighting for all vessels using surface longlines."
MPI's decision to prosecute has been praised by Forest & Bird and World Wildlife Fund New Zealand.
WWF NZ's head of campaigns, Peter Hardstaff, said: "Thousands of these birds are killed each year as bycatch in fisheries in the waters around New Zealand, South America and South Africa - fishing is the biggest threat to their survival."
Forest and Bird spokeswoman Karen Baird acknowledged the importance of having more observers on board commercial vessels.
"The fact this fisher was caught by an on-board MPI observer confirms the critical need to have much higher levels of observer coverage of the domestic surface longline fishing fleet."
Baird also called on MPI to employ electronic monitoring throughout the fishing industry "to keep fishers honest".