The Magpies' second-string conceded twice in the opening 20 minutes of their final Group C clash following Olivio Tome's rifled finish and Leandro Martins' close-range header.
Goncalo Moreira's second-half brace increased the visitors' lead further before Francisco Silva's stoppage-time header rounded off a tough afternoon at Whitley Park, extending Newcastle's winless run in all competitions to eight matches.
After Adam Lawrence's decision to step down from his role as the Under-21s' Lead Coach on Sunday, Robbie Stockdale made two changes from Friday's narrow 1-0 defeat against Middlesbrough. Sam Alabi, named on the bench for the Magpies' Emirates FA Cup third round win against AFC Bournemouth, and Leo Shahar replaced Scott Bailey and Kyle Fitzgerald respectively.
With ten minutes on the clock, Newcastle fell behind as Tome scored for the visitors. After Alabi's pass was intercepted in the middle of the park, Benfica completed a dangerous break and after the ball found its way into Tome's path, the left winger drove an angled drive into the roof of the net.
Magpies goalkeeper Adam Harrison prevented Tome from doubling his and Benfica's lead as the Ponteland-born shot-stopper diverted the forward's low strike around the right-hand post with his left knee.
A tough afternoon continued for Newcastle as Martins doubled Benfica's advantage, rising high from Kevin Pinto's cross at the back post before powering his header beyond Harrison.
United's youngsters were fortunate not to fall further behind as Tome's low cross was pulled wide of the left-hand post after Jelani Trevisan's sliding effort.
Matheos Ferreira, who netted a hat-trick in Newcastle's 5-2 FA Youth Cup win over Portsmouth last month, created Newcastle's first shot at goal on the stroke of half-time but the 17-year-old winger's effort from the edge of the box flew straight into the gloves of Benfica goalkeeper Ricardo Ribeiro.
Six minutes after the restart, Newcastle conceded a third through Moreira as the Benfica substitute's first-time drive from the edge of the box flew into the bottom right-hand corner.
With the full-time whistle approaching, a further blow was struck as Moreira netted his second goal of the afternoon, who was alert after Francisco Silva's initial header struck the post inside the six-yard area before lashing his close-range rebound into the net.
In the fourth minute of stoppage-time, Benfica rounded off the scoring through Silva. As Moreira's bending cross from the left flank was headed across the face of goal, Silva was on hand to nod the ball into an empty net.
Premier League 2 action returns for our Under-21s on Friday as the young Magpies face Sunderland at the Academy of Light (kick-off 1pm GMT).
Newcastle United Under-21s: Adam Harrison, Ciaran Thompson, Dylan Charlton, Charlie McArthur, Miodrag Pivaš, Rory Finneran (Anthony Munda 60), Leo Shahar (c) (Logan Watts 45), Sam Alabi (Mason Miley 28), Kacey Wooster (Seung-soo Park 60), Alfie Harrison (Kyle Fitzgerald 76), Matheos Ferreira.
Subs not used: James Taylor, Alfie Hutchison.
