Guinness World Records yesterday confirmed Ffordd Pen Llech, a street in the North Wales town of Harlech, had officially been awarded the title.
The Welsh street has a gradient of 1:2.67 (or 37.45%) over a 10m stretch, beating the record held by Baldwin St of 1:2.86 (35%).
Enterprise Dunedin director John Christie said it was "obviously disappointing'' to lose the title, but doubted it would have an impact on visitor numbers.
If anything, the recent rivalry over Harlech's bid to unseat Dunedin could boost visitor numbers to Baldwin St, he suggested.
"You can't argue with the facts, but obviously we'll still be the steepest street in the southern hemisphere and we'll still be an attraction for those who want to come and view what was the steepest street before this particular bid went up.
"I actually think if anything we'll start to see continued increases in visitor numbers to Baldwin St.''
There was a mixture of reactions in Baldwin St when the Otago Daily Times visited yesterday.
A steady trickle of tourists were still climbing the incline, including Kathryn Ruge, of Christchurch, who was there with her children - twins William and Daniel (both 12) and daughter Lucy (15).
Mrs Ruge felt climbing the steepest street in the world was a good way to mark her boys' final day as 12-year-olds, before their birthdays today.
The news Wales had taken the title from Dunedin was "a bit distressing really''.
"It's a New Zealand icon, like the Jaffa. The two go together.''
The change meant the family might have to "doctor our photos'' but she would visit again anyway - especially given it was free.
"It has the honour of being formerly the steepest street in the world,'' she said.
Another tourist, Venus Yeh, of Taiwan, was ''a little bit disappointed'' to hear the news, but the street was still ''beautiful'' and very steep, leaving her ''very tired'', she said.
Otago Chamber of Commerce chief executive Dougal McGowan was philosophical about the loss yesterday, saying - as the BlackCaps had shown - second in the world ''is still a pretty good achievement''.
Some tour operators might cross Baldwin St off their itineraries, but many people would still ''want to have a walk up it'', Mr McGowan said.
''It's still a place I think a lot of people want to come and visit, because it has its own stories that go with it, which is pretty neat.''
Dunedin Mayor Dave Cull said Dunedin still had a ''wonderful range of visitor attractions'', and ''the street certainly hasn't got any less steep as a result of the decision''.
The council would consider what changes were needed, but ''it may be as simple as altering the wording from the world's steepest street to the southern hemisphere's steepest street'', he said.
Some Dunedin residents, reacting online, went further, even suggesting the council should steepen the street to reclaim the title.
Mr Christie would not commit to that idea, but said there would be opportunities to market the street in new ways - perhaps even a joint initiative with Harlech, promoting both streets.
''There's always opportunities if you look at them carefully.
''We've lost this particular opportunity, to be the steepest street, but it's not necessarily the end of the story.''
