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.