The 24-year-old had been with the Wearside club since he was eight and, despite head coach Gus Poyet's desire to retain his services, an initial contract offer was dismissed and further talks ultimately came to nothing.
And Colback, who was born on Tyneside and supported the Magpies as a boy, on Monday signed a long-term contract with the St James' Park club - much to the dismay of the Black Cats.
A Sunderland statement on Monday evening read: "Jack is a player we have nurtured and developed through our academy system since he was eight years old. We gave him the opportunity to become a professional footballer and are therefore extremely disappointed in the events that have led to his departure from the club.
"This wasn't about money - the club agreed to all of the terms demanded of us during discussions and we were always led to believe that Jack wanted to stay with us. At his and his representatives' request, final talks were put on hold until the club secured its top-flight status. To our dismay, however, we were subsequently never given the chance to negotiate with him to stay.
"For him to then leave the club that has supported him throughout his formative years in such a manner, with no chance for Sunderland to recover any of the significant investment that it has made in him as a player, has left a bitter taste."
Colback, who won a Capital One Cup runners-up medal with the Black Cats in March, was thrilled with developments, however.
"I'm absolutely delighted," said the player, who scored for Sunderland in their second successive 3-0 victory over Newcastle at St James' Park in February. "To come to the team I supported as a boy, my home-town team, will be really special for me.
"It was an opportunity I couldn't let slip. If you asked fans around the world the one thing they'd like to do before they die, it would be to play for the team they support and I've got the chance to do that.
"I've only got good things to say about Sunderland. They gave me my chance and I want to thank the fans and the club for all their support.
"I hope they can understand the chance I've had here to move to my boyhood club. Now I can't wait to pull on the black and white shirt at St James' Park for the first time."
Colback becomes Newcastle's second summer signing following the capture of 20-year-old Tenerife striker Ayoze Perez.
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