The Toon teenagers, requiring a win to keep their hopes of progressing into the knockout phase alive, trailed inside the opening stages of their league phase clash at the Stade Françis Turcan following Saïd Remadnia's close-range finish.
United's youngsters were then reduced to ten men after the hour mark following Anthony Munda's straight red card after a late foul before Antoine Valero's stoppage-time finish condemned the visitors to defeat, resulting in their exit from the competition with a game to spare.
Adam Lawrence made three changes from the side which suffered a narrow 3-2 home defeat against Athletic Club earlier this month as Rory Finneran returned to the starting XI after captaining Republic of Ireland at the FIFA Under-17 World Cup finals in Qatar while Kacey Wooster and 16-year-old winger Alfie Seldon replaced Joe Brayson and the suspended Sean Neave respectively.
The young Magpies were unfortunate not to take the lead in Martigues as Scott Bailey, on target in Newcastle's 3-2 defeat against Athletic Club, latched onto Roman Dowell's intended clearance from distance before the Durham-born midfielder's fierce drive from the edge of the box flew narrowly wide of the left-hand post.
Newcastle fell behind in the 13th minute as Remadnia arrived onto Valero's pass inside the box, following a dangerous run from the former, before lifting the ball over Dowell into the bottom left-hand corner.
The visitors faced a further attack from their French counterparts minutes later as Valero collected the ball inside the penalty area but, with time and space, flashed a low effort wide of the far post.
Munda went close to equalising before the break for Newcastle's youngsters as the Cowgate-born midfielder muscled Anis Doubal off the ball and after surging at goal near the byline, lashed an effort from a tight angle wide of the target.
Seldon, who celebrated his 16th birthday last month, produced a crucial block to prevent Marseille from doubling their lead after the restart as Kelyann Bezahaf's drilled strike inside the box was blocked out for a corner by the promising teenager.
Leo Shahar, on target in Newcastle's Youth League defeat against FC Barcelona, went close to netting his second goal in this season's competition as the 18-year-old right-back, a representative of England at under-19 level, cut inside on the edge of the penalty area before his bending effort flew over the crossbar.
Newcastle were dealt a tough blow after the hour mark as Munda was sent off, with the 19-year-old central midfielder committing a late foul on Yanis Sellami in the middle of the park before receiving his marching orders from referee Alexandros Tsakalidis.
Dowell produced a strong stop to deny Remadnia from doubling his and Marseille's goalscoring tally as the Algerian retrieved possession in a dangerous position but saw his powerful strike parried by the 15-year-old goalkeeper, who has represented England at under-17 level, before Valero directed an effort wide of the target in quick succession.
With five minutes of stoppage-time awarded, Newcastle's hopes of a late leveller were extinguished as Valero extended Marseille's lead. After Keyliane Abdallah's shot was spilled by Dowell, the Marseille striker was on hand inside the box to place the ball into the net from close-range.
Newcastle United Under-19s: Roman Dowell, Scott Bailey (Joe Brayson 62), Dylan Charlton, Anthony Munda, Leo Shahar (c), Logan Watts, Seung-soo Park, Rory Finneran (Matty Taylor 74), Kacey Wooster (Henry Johnson 71), Thomas Old, Alfie Seldon (Matheos Ferreira 62).
Subs not used: Tyler Jones, Oliver Holland, Baran Yildiz, Isaac Moran, Jake Durrant, Sammy Pinnington.
