Newby has played 84 games for Tigers since his arrival at Welford Road in October 2008 but ended last season with a superb performance in the Aviva Premiership semi-final win over Saracens.
The 33-year-old, who has three caps for All Blacks and a Commonwealth Games gold medal with the New Zealand Sevens squad in Manchester from 2002, was advised after his first league start of the season to retire due to a serious knee injury.
He said: "Coming to Leicester Tigers has been a great experience and I have a lot of good memories from playing for the club.
"Outside the rugby, the thing that stands out for me is that, although the club is a big business, it is also like a big family and everyone is very welcoming."
Newby marked his Leicester debut against Sale Sharks in October 2008 by drop-kicking a conversion of a last-minute try from team-mate Brett Deacon and was also successful in the historic shoot-out in the 2009 Heineken Cup semi-final against Cardiff Blues.
The New Zealander was part of the Tigers' Premiership-winning squads of 2009 and 2010 and collected an LV= Cup winner's medal earlier this year.
Looking to the future, Newby added: "I would like to stay in rugby in some capacity and coaching does appeal to me.
"I've worked with a lot of good coaches and top-class players in my rugby career and I would like to think I've picked up knowledge of the game that I would like to pass on in a coaching capacity somewhere."
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The entire All Blacks apparel line has been updated for 2013/14. Check out the New Zealand All Blacks polo.
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