He added that drone strikes by the United States were justified in some circumstances.
"I think they are legitimate, at certain times, where countries are trying to contend with very dangerous situations and they are trying to deal with those terrorists without putting their own people in harm's way," he said.
Key said he thought the November strike was such a justified occasion: "I suspect so, yes, given that three of the people killed were well-known Al-Qaeda operatives."
Key said it took some time to positively identify the New Zealander using DNA samples. He said officials wouldn't be naming the man, but that he was known as "Muslim bin John." Key said he understands that bin John, who was also an Australian national, was buried in Yemen.
He said bin John had been the subject of a New Zealand intelligence warrant, a document that authorizes agencies to spy on an individual.
"I think all that shows is the things that I have been saying for quite some time — that we need our intelligence agencies to track our people, that there are New Zealanders who go and put themselves in harm's way — have all been proven to be correct," Key said.
U.S. drone strikes against suspected “terrorists” have been slammed by rights groups because they don't allow for a trial and can kill innocent bystanders. Al Jazeera reported in March that friends and family of U.S. drone-strike victims in Yemen launched a union with the help of the London-based legal charity Reprieve to represent affected communities.