Internal Affairs Minister Brooke van Velden said phase 2 would cover vaccine efficacy and safety, and look at the impact of extended lockdowns in Auckland and Northland.
Litigation specialist Grant Illingworth KC has been appointed as chairperson, along with commissioners Judy Kavanagh and Anthony Hill.
Phase 1 has met thousands of people throughout the country, and received more than 13,000 public submissions.
The inquiry's chair, Professor Tony Blakely, who is stepping down from November, said during the course of his work he had observed the depth of the divisions the pandemic had caused in New Zealand society.
Some people felt, and indeed, had been wronged.
"I hope that what our report will do is speak independently and impartially ...and at least put some sunlight, some daylight on to that so people can see [what went on] ... it's very interesting to see some people standing back and reflecting on the pandemic."
"So people are looking back and going 'gosh, there are some unintended consequences here'."
While New Zealand had handled the pandemic well, it could have done better and the panel was intent on coming up with some solutions.
Risk having two panels, two reports
He told Morning Report he didn't think an inquiry of this kind had ever had two phases before, but he didn't want to continue in his role beyond this year.
He agreed the investigation was already politicised; however, there would be some "profound" recommendations from the panel's work.
A wide range of voices had been heard, ranging from Voices for Freedom through to medical experts and policy makers.
However, with another panel taking over there was a risk that there would be two reports with different conclusions.
"Our job, and I'm confident we're going to do it, is to write a really good authoritative report that covers the wide breadth of the things that we can cover. The next inquiry will go deeper in some issues."
His panel had passed on to the new one some aspects that might need to be explored further.
Some of the second panel's work would have more focus on the more controversial pandemic aspects such as vaccine mandates and vaccine efficacy.
Prof Blakely's work had also covered those topics although it had not looked at vaccine safety and harm.
There had been submissions from people who had been affected personally and professionally by this issue.
"So there's issues like that where phase two could dig deeper."
While the UK's inquiry had been held in public, Prof Blakely said it was a very expensive approach and he was satisfied with New Zealanders giving their views in private.
In phase two there would be some public hearings "if they deem it to be useful".
Van Velden has declined a request to be interviewed on the inquiry's next stage. A spokesperson from her office said there was a freeze on Act Party MPs talking to Morning Report.
