The City of Newcastle operates as a code city under Washington state law, granting it broad home rule powers. State law (RCW 35A.11.020) states that "the legislative body of each code city shall have all powers possible for a city or town to have under the constitution of this state and not specifically denied to code cities by law."

The City Council, Newcastle’s legislative body, consists of seven elected members who adopt ordinances, which are codified as the Newcastle Municipal Code and are fully enforceable.

The Council also approves resolutions, which guide policies, set fees, and authorize contracts, as well as motions, which direct city operations. Newcastle is a contract city, meaning essential services like police and fire protection are provided through agreements with other jurisdictions.

Newcastle follows a Council-Manager form of government, where the City Council sets policies, and the City Manager implements them. Every two years, the Council elects a Mayor, who presides over meetings and represents the city publicly.