His first major film role was as the Artful Dodger in David Lean's 1948 film Oliver Twist.

Newley had a successful pop music career, with two number one hits in 1960: "Why?" and "Do You Mind?" He won the 1963 Grammy Award for Song of the Year for "What Kind of Fool Am I", but he was also well-known for "Gonna Build a Mountain" and comic novelty songs such as his version of "Strawberry Fair". He wrote songs that others made hits including Goldfinger (the title song of the James Bond movie), and Feeling Good, which became a hit for Nina Simone. With Leslie Bricusse, he wrote the musical Stop the World - I Want to Get Off in which he also performed, earning a nomination for a Tony Award for Best Leading Actor in a Musical. His other musicals included The Roar of the Greasepaint—the Smell of the Crowd (1965) and Willy Wonka and the Chocolate Factory (1971), based on the children's book by Roald Dahl. The play was released in a film version in 1971 .

In recognition of his creative skills and body of work, Newley was elected to the Songwriters Hall of Fame in 1989 .

He was married to Ann Lynn from 1956 to 1963, but the marriage ended in divorce. He then was married to the actress Joan Collins from 1963 to 1971. The couple had two children, Tara Newley and Sacha Newley. His third wife was former air hostess Dareth Rich, and they also had two children, Christopher and Shelby.

His last feature role was in 1998 when Newley joined the cast of EastEnders on British television in the part of 'Vince Watson', which was to be a regular role. But Newley had to withdraw after a few months when his health began to fail. He died on April 14, 1999, in Jensen Beach, Florida from renal cancer at the age of 67. He was survived by his children and also his mother Grace, then in her mid-90s.

The shortlived 1960 Associated Television Network Limited series The Strange World of Gurney Slade in which Newley starred, continues to have a cult following due to its postmodern premise that the Newley character is trapped inside a television programme. Apart from a repeat of one episode on Channel 4 in the mid-1980s, it has not been seen in the UK in recent years. The show's theme tune by Max Harris may be better-known today than the series itself.

Newley's vocal style has been recognised as a major influence on that of David Bowie.