Goncalo Ramos gave Benfica the lead after 15 minutes as he headed the ball in from Joao Mario’s corner.
But the advantage didn’t last long as Miguel Almiron started and finished a fine attacking move to turn the ball in from Kieran Trippier’s cross.
Benfica restored their advantage as Alex Grimaldo curled a 25-yard free-kick into the top right corner of the goal.
But Trippier and Almiron combined again as the Paraguayan levelled the score at 2-2 going in at half-time.
Newcastle finished the match with 10 men after Joelinton was shown a second yellow card with nine minutes remaining.
Benfica made their man advantage count in the final minute of normal time as Henrique Araújo stroked home to make it 3-2.
1. Nick Pope - 6
Called into action a few times early on but never looked uncomfortable until Benfica scored the opening goal from a corner kick. Should have been stronger to claim the cross into the box and will have been disappointed to be beaten by another set-piece shortly afterwards but did make a good save to deny Joao Mario.
2. Kieran Trippier - 8
Tested by Benfica’s overload down the right side but produced the goods at the other end with a clever low ball for Miguel Almiron to equalise. Was at it again to set the Paraguayan up to make it 2-2 at half-time. Photo: PAUL ELLIS
3. Jamaal Lascelles - 5
Jumped too late as Benfica took the lead from a corner kick. Photo: Ian MacNicol
4. Sven Botman - 7
Made a fine block to deny Rafa in the first half. Looks at home in black and white.