Newby has been ruled out of this season's competition and New Zealand's European tour after surgery on a shoulder injury and is set to be sidelined for around four months.
Flanker Blackie, 27, is one of the most experienced players in the Otago squad, having played 65 matches as well as being a regular for the Highlanders since 2001.
He has also played for the Junior All Blacks for the past two years and was a member of the gold medalist Sevens team at the Commonwealth Games in March.
Otago coach Steve Martin said: "Josh was already one of our vice-captains and a key member of the leadership group within the squad.
"We're fortunate we have leaders of the calibre of Josh and the vice-captain, Neil Brew, and that goes some way to mitigating the loss of Craig."
Newby has been replaced in the squad by flanker Tim Boys, who is himself returning from injury.