Newton was born in Zambia, the daughter of Nyasha, a Zimbabwean health-care worker/nurse, and Nick Newton, a white English laboratory technician and artist. The name "Thandiwe" means "beloved" in Ndebele and the name "Thandie" is pronounced TAN-dee. Newton played a character named "Beloved" in the film adaptation of the Toni Morrison novel Beloved in 1998. According to Newton, her mother is a Zimbabwean Shona Princess.[5] She was raised in Zambia and at Penzance, Cornwall, and educated at Downing College, University of Cambridge.

Newton made her film debut in Flirting (1991). This Australian movie was also a launch pad for a young Nicole Kidman, with whom she has remained friends. She gained international recognition opposite Nick Nolte in the Merchant-Ivory production of Jefferson in Paris as Sally Hemmings, which led to her being cast in Jonathan Demme's Beloved (1998), in which she played the title character and costarred with Danny Glover, Kimberly Elise, and Oprah Winfrey. She played the female lead Nyah Hall in the film Mission: Impossible II. When this film went over schedule, she had to pull out of the film Charlie's Angels, and her character ultimately went to Lucy Liu.

Between 2003 and 2005, Newton played Makemba "Kem" Likasu, the love interest of Dr. John Carter on the American television series ER, and in 2004 also appeared in The Chronicles of Riddick. She appeared in Crash as a wealthy black woman who, along with her husband, finds herself the target of a racist policeman (played by Matt Dillon). The policeman molests her before ultimately saving her life. Newton was honoured with a BAFTA award for Best Supporting Actress in 2006. Crash also won the Academy Award for Best Picture in 2005. In 2007, she starred alongside Eddie Murphy in the comedy Norbit as his love interest.

Newton was an introducer at Wembley Stadium on July 7, 2007 for the UK leg of Live Earth. She was due to introduce Al Gore to the concert, but he was delayed, leaving Newton to tell jokes to try and entertain the audience.

Newton married English writer and director Ol Parker in 1997. The couple have two daughters: Ripley, born in 2000, and Nico, born in 2004. Her daughters were named after the character Ripley in the Alien films and the cult singer of The Velvet Underground fame.

In 2006, she contributed a foreword to We Wish: Hopes and Dreams of Cornwall's Children, a book of children's writing published in aid of the NSPCC. In it, she writes vividly about her childhood memories of growing up in Cornwall and the way in which the county's vibrant cultural heritage made it easy for her to "enrich every situation with layers of magic and meaning".

Newton swapped her BMW X5 for a Toyota Prius after protesters bombarded the car with eggs at the gates of her daughters' school. She then wrote to her celebrity friends, asking them to join her in switching to more environmentally sound cars.