The Toon teenagers conceded three times in the first-half at Whitley Park, with Cole Brannigan's close-range finish firing the visitors into an early lead before Jack McGrath's free-kick and Mason Cotcher's composed effort extended the Villans' advantage towards the half-time break.
Newcastle's youngsters were, ultimately, left to rue missed opportunities in front of goal during the first-half and, despite a spirited second-half display, Brannigan's deflected strike rounded off a difficult evening for Chris Moore's side.
With Magpies head coach Eddie Howe in attendance, Villa took the lead in the fourth minute through Brannigan as the left winger was on hand at the back post to place the ball home from inside the penalty area.
Trevan Sanusi, who made his professional debut during the Magpies' Emirates FA Cup third round victory against Bromley last weekend, almost levelled for the hosts in swift fashion but the 17-year-old winger, a representative of England at under-18 level, flashed his effort wide of the right-hand post.
More chances at goal followed for the young Magpies, with Sean Neave firing a fierce attempt over the crossbar before Joe Brayson, son of former United forward Paul, skewed an effort wide of the target after Leo Shahar's teasing cross was directed into the teenage forward's path.
Michael Mills, on target in the previous round against Brighton & Hove Albion, intercepted a misplaced pass towards the edge of Villa's penalty area but the 15-year-old, who joined the Magpies from Port Vale last summer, drilled a powerful effort over the bar.
Anthony Munda, who signed his first professional contract with his boyhood club last summer, was unable to draw the hosts level after the Cowgate-born midfielder latched onto a loose ball inside the box but the England Under-18 international sliced his effort wide of the right-hand post.
In the 35th minute, Newcastle were dealt a tough blow as McGrath extended the visitors' lead. After Neave conceded a foul on the edge of the box, the Villa forward's free-kick curled around the United wall and into the right-hand corner.
United conceded a third before the half-time whistle through Cotcher as McGrath completed a dangerous run towards goal before teeing up the former inside the box, who calmly stroked the ball into the bottom right-hand corner.
Newcastle started the second-half positively as Mills arrived onto Munda's pass inside the box but his low effort was blocked by the feet of Villa goalkeeper Sam Proctor.
Magpies 'keeper Aidan Harris, who was named on the bench for Newcastle's UEFA Champions League draw away at AC Milan last season, produced an impressive stop to prevent Villa from extending their lead, holding Alfie Lynskey's stinging volley from the edge of the box.
In the 71st minute, Newcastle conceded a fourth as Brannigan notched his second goal of the night, controlling Trai-Varn Mulley's cross from the right flank before the Northern Ireland Under-19 international's deflected strike flew into the roof of the net.
Newcastle United Under-18s: Aidan Harris, Leo Shahar (c), Logan Watts, Luke Craggs, Jude Cogdon (Henry Johnson 89), Rory Finneran (Mohamed Waddani 89), Anthony Munda, Trevan Sanusi (Matthew Taylor 89), Michael Mills (Matheos Ferreira 68), Joe Brayson (Sam Alabi 46), Sean Neave.
Subs not used: Tyler Jones, Kacey Wooster.
