The Victorian priest, hymn writer, and poet was declared a Saint before a congregation of 20,000, at an open-air ceremony in St Peter's Square.
The leader of the Catholic Church in England and Wales, Cardinal Vincent Nichols was alongside the Pope to witness the canonisation of the first English saint of the modern age.
Archbishop of Westminster, Cardinal Vincent Nichols told Premier it's a day of celebration for Britain's Catholics: "I've been describing it as a party.
"It is just a moment of great joy that this man who whose life is so full, and whose sensitivities are so important, and who struggles through so many difficulties, we can see much more clearly into his heart. And what a great disciple of Christ he was."
The former Anglican priest controversially converted to Catholicism in 1845 and went on to found a society of priests known as the Birmingham Oratory in 1848.
Cardinal Nichols honoured Newman's dedication to the people of Birmingham, where he served as a parishioner for 40 years.
"He was an outstanding example for us of a priest working in a parish," Nichols said.
"Newman worked quite quietly in the parish in Birmingham, where he served the people who serve the poor."
The theologian, who was made a cardinal in 1879 spoke to many about issues of faith, education and conscience through his various writings and has been described as one of the most influential figures of the 19th century by Britain's ambassador to the Holy See Sally Axworthy.
Prince Charles was among the congregation in representation of the British Monarchy.
Charles has praised the cardinal for his "tireless work" in service to the Catholic community and his strength of conviction in his beliefs.
Speaking to the Vatican publication, L'Osservatore Romano he said: "In the age when he lived, Newman stood for the life of the spirit against the forces that would debase human dignity and human destiny.
London-born Cardinal Newman, who died in England in 1890 aged 89, had been hailed by former Pope Benedict XVI as a model for ecumenism.
The process of becoming a Catholic saint requires a person to have two miracles accredited to them which must be verified by the Vatican.
Newman's first came in 2001 when Jack Sullivan, an American deacon from Massachusetts, attributed the healing of a spinal disease Cardinal Newman after he prayed to him.
The second was in 2013 when Chicago lawyer Melissa Villalobos claimed she had prayed to the churchman after her placenta tore while she was pregnant.
The last Briton to become a saint was Scottish priest John Ogilvie, the 17th century martyr canonised by Pope Paul VI in 1976.
A service in the new saint's honour will also be held at Westminster Cathedral next week.
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