Newman, who is ranked No. 6 in the latest positional rankings by ESPN NFL draft analyst Todd McShay, instead will begin preparing for the 2021 NFL draft.
The graduate transfer from Wake Forest leaves without ever playing a game for the Bulldogs.
"I would like to thank Coach [Kirby] Smart for extending the opportunity for me to be a part of the University of Georgia football program," Newman said on Twitter. "Although my time has been short I've built some great relationships and I've had a chance to continue my development."
USC transfer JT Daniels, who joined the Bulldogs in May and received an NCAA waiver to play this season, becomes the favorite to replace three-year starter Jake Fromm, who is now a rookie with the Buffalo Bills.
The 6-foot-4, 230-pound Newman started 16 games for the Demon Deacons the previous two seasons. In 2019, he completed 60.9% of his attempts for 2,868 yards with 26 touchdowns and 11 interceptions. He added 574 rushing yards with six more scores.
"While we will miss him being part of our program, I fully support Jamie's decision and we will continue to regard him as a Georgia Bulldog," Smart said in a statement. "Certainly we wish him nothing but the best in his quest for an NFL career and he knows he will always have a home at UGA."
Daniels, a redshirt sophomore from Irvine, California, has three years of eligibility remaining after missing all but one game in 2019 because of a knee injury.
In 2018, he became only the second true freshman quarterback to start an opener for the Trojans after graduating one year early from Mater Dei High School in Santa Ana, California. Daniels threw for 2,887 yards with 15 touchdowns and 11 interceptions, while completing 60.7% of his passes in 12 starts over two seasons at USC.
Daniels suffered a knee injury in the 2019 opener against Fresno State, and freshman Kedon Slovis took over the starting job and passed for 3,502 yards with 30 touchdowns and nine interceptions.