His acting career began at the age of 16 at the Birmingham Repertory Theatre in 1921. He appeared in many repertory shows until he went to Canada where he worked on a cattle ranch for a year.

Newton married four times and had three children: Sally Newton (born 1930), Nicholas Newton (born 1950), and Kim Newton (born 1953). His third marriage ended when he had a nervous breakdown in 1951. He brought his son to Hollywood in 1951 and was accused of kidnapping him. He married his fourth wife, Vera Budrick, in June 1952. They had a son, Kim, born 1953. After some court battles, Newton's elder son was placed in the custody of his aunt and uncle.

He returned to England and performed in many plays in the West End of London, including Bitter Sweet by Noël Coward, The Letter with Gladys Cooper, and Cardboard Lover with Tallulah Bankhead. He also appeared in Private Lives on Broadway, taking over the role from his friend Laurence Olivier. From 1932 to 1934, he was the manager of the Shilling Theatre in Fulham, London. He had a small role in the film Reunion (1932).

Newton was put under contract to Alexander Korda who cast him in small roles in the cinema films Fire Over England (1937), Dark Journey (1937), Farewell Again (1937) and The Squeaker (1937). He also had a part as Cassius in the abandoned version of I, Claudius and in 21 Days (shot in 1937, released 1940). Newton was borrowed by 20th Century Fox for The Green Cockatoo (1937). Newton had a good role supporting Charles Laughton in Vessel of Wrath (1938). He had another strong part in Yellow Sands (1939) and had his first film lead in Dead Men are Dangerous (1939). He made another with Laughton, Jamaica Inn (1939), playing the romantic male lead, directed by Alfred Hitchcock. In 1939, he played Horatio to Laurence Olivier's Hamlet at the Old Vic, in a production that also included Alec Guinness and Michael Redgrave. Newton kept busy as a film actor, appearing in Poison Pen (1939) and Hell's Cargo (1939).

Newton continued primarily as a supporting actor in films, appearing in Gaslight (1940), Busman's Honeymoon (1940), Bulldog Sees It Through (1940), Channel Incident (1940) and Major Barbara (1941), directed by Gabriel Pascal from the play by George Bernard Shaw. Newton got another chance as a star in Hatter's Castle (1942), opposite Deborah Kerr and James Mason. He consolidated his status by playing opposite Anna Neagle in the Amy Johnson biopic They Flew Alone (1942), playing Jim Mollison.

Newton enlisted in the Royal Navy and saw active Service in the rank of an Able Seaman on board HMS Britomart, which fought as an escort ship on several Russian convoys. After two and a half years in the Royal Navy was medically discharged in 1943.

On resuming his acting career Newton played the lead in This Happy Breed (1944), a role turned down by Noel Coward and Robert Donat. Directed by David Lean, it was a huge hit. So too was the Laurence Olivier version of Henry V (1944), in which Newton played Ancient Pistol. These appearances helped British exhibitors vote him the 10th most popular British film star of 1944. During the war, he starred in the West End in No Orchids for Miss Blandish, which was a hit.

Newton had the star role in a thriller Night Boat to Dublin (1946), then had a showy cameo role in Odd Man Out (1947); this performance was later immortalised in Harold Pinter's play Old Times. He stayed in leads for Temptation Harbour (1947) and Snowbound (1948). Lean cast him as Bill Sikes in Oliver Twist (1948), a huge success critically and commercially.

He then made a series of films with Hollywood stars and/or financing: Kiss the Blood Off My Hands (1948), a noir with Joan Fontaine and Burt Lancaster; Obsession (1949), a thriller directed by Edward Dmytryk, playing an acid murderer. He played Long John Silver in Walt Disney's version of Treasure Island (1950), with Bobby Driscoll and directed by Byron Haskin. This was a big hit in Britain and widely seen in the US. Less well known is Waterfront (1950).

His final performance on stage was in the 1950 production of Gaslight with Rosamund John at the Vaudeville Theatre.

Treasure Island's success prompted Newton to relocate to Hollywood. He was one of several British actors in Soldiers Three (1951), an Imperial adventure tale. He returned to Britain for Tom Brown's Schooldays (1951) to play Thomas Arnold, then was cast by 20th Century Fox as Javert in their version of Les Misérables (1952). In 1951 he was voted the sixth most popular British star in Britain.

Gabriel Pascal used him in another Shaw adaptation, Androcles and the Lion (1952). It was made by RKO who cast Newton in the title role of Blackbeard the Pirate (1952).

Fox asked him back for a war film, The Desert Rats (1953), playing a drunken school Teacher who discovers bravery during World War Two. He was one of several names in an airplane disaster movie The High and the Mighty (1954).

Back in Britain, Newton was given the lead in The Beachcomber (1954), a remake of Vessels of Wrath, this time in the part originally played by Charles Laughton. He again played Long John Silver in a 1954 Australian-made film, Long John Silver. It was shot at Pagewood Studios, Sydney and directed by Byron Haskin, who had directed Treasure Island. The company went on to make a 26-episode 1955 TV series, The Adventures of Long John Silver, in which Newton also starred. While filming in Australia in 1954, Newton was declared bankrupt with debts in the UK of £47,000.

Newton suffered from chronic alcoholism and died on 25 March 1956 in his 51st year following a heart attack in Beverly Hills, California. His body was interred in Westwood Village Memorial Park Cemetery in Los Angeles. Years later, his son Nicholas recovered it from Los Angeles and had it cremated. He subsequently scattered its ashes into the English Channel at Mount's Bay, in Cornwall, near Lamorna on the South-Westerly edge of England, where his father had spent his childhood years.