The 2.43pm quake, centred off the southwest coast of Tuatapere, was widely felt across the South where thousands of people reported the shake.
It initially sparked fears of a tsunami and an alert was sent to the phones of Southland residents asking to them stay away from water and beaches.
GNS Science seismic duty officer Sam Taylor-Offord said the magnitude 6.8 earthquake with moderate shaking occurred 167km west of Stewart Island.
"It was felt widely throughout the lower South Island and we received over 4700 ‘felt’ reports.
"Our coastal sea level gauge in southwest Fiordland recorded a 10cm tsunami enduring for 90 minutes after the earthquake."
GNS would continue to monitor for any new activity from the National Geohazards Monitoring Centre, he said.
"This is another reminder that earthquakes can occur anywhere in New Zealand at any time."
Yesterday afternoon Emergency Management Southland warned people to be aware of the risk of aftershocks.
A magnitude 5 aftershock struck in the same area as the first quake at 3.56pm.
Civil Defence controller Aly Curd said the threat of a tsunami landing was eventually ruled out but caution was urged on the coastline.
"People who have left the coast as a precaution may now return but are advised to stay away from beaches and out of the water for the next 12 hours as currents and tidal patterns may have been affected.
"Boaties should also exercise extreme caution."
The Southland District Council, Invercargill City Council and Southland Hospital said yesterday afternoon there were no reports of damage and it was "business as usual".
However, residents from across Southland, Queenstown and Dunedin reported feeling the shake.
Invercargill resident Rachel McBright said she was at her office in the city when she noticed the table shaking.
"It gave me motion sickness. I noticed the table and chairs shaking, so just went to below the door frame. It was a good shake"
Tania Hughes agreed.
"We are from Wallacetown near Invercargill and the quake was strong. Felt like a rolling earthquake, not sharp but long," she said.
Stewart Island’s Halfmoon Bay School principal Kath Johnson said the children outside in the swimming pool did not feel the shake, while those indoors did.
She said two classes of children "bailed underneath the desks" as the quake hit.
Stewart Island resident Bruce Ford said it took a few seconds to understand it was a earthquake.
"There was a double rumble and things started to shake and it felt like the train was coming past.
"Some of the pictures have moved around a bit. They’re all off-square now."
Olivia Clegg felt the quake in Dunedin’s Phillip Laing building, saying it was the first one she had ever felt.
"Was the strangest wobble-sway on my chair for about 10 secs."
By Luisa Girao and Toni McDonald
