Newby left the field on a stretcher in the first half of the game against Ireland in Gloucester after hurting his neck while scoring a try.
Play was held up for 15min while the veteran flanker was attended to by medical staff, a spectator told the Otago Daily Times. Newby was then taken to hospital for scans.
Highlanders manager Greg O'Brien spoke to Newby's wife, Sally, yesterday and reported Newby had been diagnosed with a soft-tissue injury.
Newby would have to wear a neck brace for about three weeks, O'Brien said. He would miss the Barbarians' remaining game, against England.
The new Leicester recruit will return to Dunedin to recover and possibly play a game or two for his club, Dunedin, before embarking on his final New Zealand rugby campaign with Otago.
Newby heads to England at the end of the year to begin a two-year contract with Leicester.
Newby and South African No 8 Pedrie Wannenburg scored the tries for the Barbarians in their 14-39 loss to Ireland at Kings-holm.
It was the first win in three attempts for the Irish, who now head to New Zealand to play the All Blacks in Wellington in nine days.
Captain Brian O'Driscoll was a late withdrawal from the game as he returned to Dublin following the death of a close friend. In his absence, stand-in captain Shane Horgan and No 8 Jamie Heaslip each scored two tries and winger Tommy Bowe added a fifth in a surge of 24 points in the first 23min, which left Ireland in control.
Ireland did not include any players from Munster, which won the European Cup at the weekend. That suggests the Irish, the big disappointments of last year's World Cup, will fancy their chances of upsetting a new-look All Black team in Wellington.
