The young Magpies trailed in the opening stages at the Loughborough University Stadium following Chris Wood's close-range header, the former Magpie's first outing since sustaining a knee injury in October.
Kalum Thompson's powerful strike before the half-time break doubled Forest's lead before Donnell McNeilly's effort on the hour mark extended the hosts' advantage as United's hopes of securing a play-off spot with a top-16 finish took a difficult blow.
Robbie Stockdale made two changes from the starting XI which claimed a 2-0 win against Blackburn Rovers last week as Henry Johnson was handed his first start at under-21 level, replacing Alex Murphy.
Michael Mills, who received a maiden call-up for England Under-17s on Friday, was also awarded his full under-21s bow, replacing Sean Neave in attack, while Wood led the line for Forest's second-string.
Magpies goalkeeper Aidan Harris, named on the bench for Wednesday's UEFA Champions League defeat away at FC Barcelona, was forced into early action as the 19-year-old got down low to parry Thompson's low drive inside the box before Mason Miley cleared the ball from danger.
In the 11th minute, Forest took the lead through Wood. After James Sinclair raced onto Justin Hanks' neat pass in behind the United defence, the Forest left-back cut inside from the left flank before his cross-cum shot was nodded into the net by the 88-time New Zealand international.
Newcastle were fortunate not to fall further behind as Zyan Blake struck the woodwork for the hosts, dispossessing Rory Finneran on the edge of his own penalty area before his resulting low strike clipped the foot of the left-hand post, with Eric da Silva Moreira dragging his rebound across the box.
Harris, who spent the first half of the current campaign on loan at NIFL Premiership side Coleraine, produced a handful of saves to prevent Forest from doubling their advantage, holding efforts from Moreira, Blake and Wood.
Forest, however, extended their lead in the 42nd minute through Thompson's clinical finish. After Moreira beat Johnson in a race for the ball on the right flank, the Forest full-back's cross into the box was only half cleared into Thompson's path, who lashed a firm effort into the roof of the net.
Newcastle suffered another setback in the 60th minute as McNeilly, introduced from the restart in place of Wood, scored Forest's third goal of the evening.
As Blaine McClure advanced towards goal, the midfielder picked out McNeilly before the Forest substitute slotted a low effort from the edge of the box into the bottom right-hand corner.
Matheos Ferreira, who scored a hat-trick in United's 4-3 away win against Aston Villa last month, went close to pulling a goal back in the closing stages as the 17-year-old winger collected the ball from distance and, after a dangerous run, saw his goal bound effort tipped around the post by Forest goalkeeper George Murray-Jones.
United's youngsters are now situated in 21st place of the 29-team table, three points adrift of the top-16 spots with two league games remaining.
Newcastle United Under-21s: Aidan Harris, Mason Miley, Henry Johnson, Miodrag Pivaš, Ciaran Thompson (c), Rory Finneran, Kyle Fitzgerald (Matheos Ferreira 58), Scott Bailey (Fraser Harper 80), Michael Mills, Anthony Munda, Seung-soo Park.
Subs not used: Adam Harrison, Baran Yildiz, Joe Brayson.
