Newey was born in Colchester, Essex. He attended Repton public school, where he was a contemporary of motoring journalist Jeremy Clarkson. At 16 he was expelled after pushing up the sound levels at a concert, cracking stained-glass windows in the school's historic Pears School Building. He earned a first-class honours degree in Aeronautical Engineering from the University of Southampton in 1980 and immediately entered motorsport, joining the Fittipaldi Formula One team under Harvey Postlethwaite before moving to March in 1981.
After a period as a race engineer in European Formula 2, Newey designed the March 82G and 83G sports cars for the IMSA GT Championship, the latter winning the series in 1983 and 1984. He then moved to the March Indycar project. His March 85C design won the 1985 CART championship with Al Unser and the 1985 Indianapolis 500 with Danny Sullivan. The March 86C repeated both titles in 1986, with Bobby Rahal winning both the CART championship and Indianapolis 500. A brief move to the Haas Lola Formula One project ended when the team withdrew at the close of 1986.
Rehired by March as chief designer for Formula One, Newey produced the 1988 March 881, more competitive than expected: Ivan Capelli finished second in Portugal and briefly led the 1988 Japanese Grand Prix. As March became Leyton House Racing in 1990, Capelli again ran at the front of the French Grand Prix before finishing second. Newey was dismissed in the summer of 1990 but quickly signed by Williams.
At Williams, working alongside technical director Patrick Head, Newey's FW14 was competitive from mid-1991. In 1992 the FW14B was dominant; Nigel Mansell took the Drivers' title and Newey secured his first Constructors' Championship. A second Constructors' title followed in 1993 with Alain Prost in the FW15C. Despite a difficult 1994 season — marred by the death of Ayrton Senna at the San Marino Grand Prix in a Newey-designed car — Williams claimed a third consecutive Constructors' title. Newey was charged with manslaughter following the Senna accident but was acquitted in December 1997; acquittals were upheld through multiple appeal stages, with Italy's Supreme Court giving a final full acquittal in May 2005.
By 1995 Newey sought a technical director role, but Patrick Head's position as a Williams co-founder blocked his path. After Williams regained both championships in 1996 with Damon Hill and Jacques Villeneuve, Newey was placed on gardening leave before joining McLaren. His Williams era produced 59 race victories, 78 pole positions, and 60 fastest laps across 114 races from 1991 to 1997.
Unable to influence the 1997 McLaren MP4/12, Newey focused on the 1998 car. The McLaren MP4/13 was dominant; Mika Häkkinen won the 1998 Drivers' Championship and retained it in 1999 with the MP4/14. Häkkinen narrowly missed a third title in 2000. In 2001, Newey signed with Jaguar Racing under former CART colleague Bobby Rahal, but McLaren's Ron Dennis persuaded him to remain after Rahal's position at Jaguar was undermined by internal politics and he was subsequently dismissed. Newey spent his final McLaren years without a championship-winning car, officially departing at the end of 2005 when Red Bull announced his signing.
Newey joined Red Bull in February 2006, reported to be earning around $10 million a year. His designs transformed the team. The RB5 in 2009 was a significant step forward; the RB6 in 2010 won the Constructors' Championship, with Sebastian Vettel taking the Drivers' title — making Newey the first Formula One designer to win Constructors' Championships with three different teams. Red Bull and Vettel won both championships in 2011, 2012, and 2013 in succession. At the 2013 Canadian Grand Prix, Vettel's 100th win for Red Bull also marked Newey's 200th Formula One victory.
After the introduction of V6 turbo-hybrid regulations in 2014, Renault power unit struggles cost Red Bull competitiveness, though the cars still won races between 2014 and 2020. A switch to Honda power in 2019 eventually restored title-fighting capability. The RB16B won the 2021 Drivers' Championship with Max Verstappen. The RB18 delivered both titles in 2022 and the RB19 in 2023, the latter winning 21 of 22 races (95.45%) to become the most successful Formula One car in history.
On 1 May 2024, Red Bull announced Newey would step back from day-to-day design duties to focus on the RB17 hypercar. He departed Red Bull in the first quarter of 2025.
Newey signed with Aston Martin in September 2024 as a shareholder and Managing Technical Partner, officially starting work on 1 March 2025 in time for the 2026 regulatory cycle. In November 2025, it was announced he would take over as Team Principal in 2026, replacing Andy Cowell.
Newey collaborated with Kazunori Yamauchi and Sebastian Vettel on the Red Bull X2010 and X2011 concept cars for the video game Gran Turismo 5. He also participated in the design of the Aston Martin Valkyrie hypercar, a custom submarine for Red Bull co-founder Dietrich Mateschitz, and an Oyster 885 yacht. As a competitor, he raced at Le Mans and in the Ginetta G50 Cup. He was appointed Officer of the Order of the British Empire in 2012. His son Harrison Newey became a racing driver, winning the 2016–17 MRF Challenge Formula 2000 Championship and the 2017–18 Asian Le Mans Series.