Both sides rued decisions by referee Paul Durkin, who later regretted having denied Newcastle skipper Alan Shearer a first-half penalty, though he had no second thoughts over a goal he disallowed for United's France defender Mikael Silvestre.
But the draw was good news for both Arsenal, the overnight leaders on alphabetical order, and Chelsea, who hammered Leicester City 4-0 earlier on Sunday and reduced the gap separating them from United to five points.
Chelsea's Dutch striker Jimmy Floyd Hasselbaink claimed two in the first half, Romanian substitute Adrian Mutu ended a two-month goal drought in the 88th minute and Nigeria defender Celestine Babayaro rifled in their fourth in stoppage time.
The result in Manchester was a setback for United, who had won their six previous league games and had also been 5-3 winners in this fixture last season.
Newcastle put on a battling performance and were unlucky in the 26th minute when Shearer burst into the area and television pictures showed him being tripped by American keeper Tim Howard.
Durkin told Sky Sports afterwards he had been too far away to be certain of Howard's contact but admitted, after seeing a video replay, that a mistake had been made.
Asked if he would have given a spot-kick having seen it from the camera angle, he said:
Shearer's team were no luckier in the second half when midfielder Jermaine Jenas hit the bar with a header.
But the wheel of fortune turned against United after 65 minutes when Silvestre's effort was disallowed for pushing on Newcastle defender Andy O'Brien.
Chelsea's win enabled them to shrug off their midweek loss to Liverpool and a poor spell in general after losing three of their five games before Sunday.
"Today we showed character, skill, quality -- everything," Ranieri told Sky Sports. "This match was important for getting our confidence back ... we really wanted to win.
Hasselbaink summed up the mood, saying: "I was up for it and I think everybody else was because we had a point to prove."
Hasselbaink got off to a flying start by neatly backheeling his first after only 12 minutes, beating his marker Nikos Dabizas to Joe Cole's low cross from the right.
He followed up just before the break with a free-kick that took a wicked deflection off the luckless Dabizas on the Greek defender's home debut.
Two goals already looked enough when Mutu fired in from distance and Babayaro pounced on some sloppy defending to crash home the fourth.