The former Arsenal boss had emerged as a leading candidate for the job, with recent reports claiming the Magpies' new mega-rich owners were aiming to make the appointment to replace Steve Bruce by the weekend.
But, following their billion pound take over, it appears Newcastle's search for a new manager to take over the reigns at St James Park will continue.
After Bruce's recent departure, the club have been searching for someone to change their fortunes as they bid to avoid relegation to the Championship.
Currently, Bruce's former assistant coach Graeme Jones has taken charge of the first team but has struggled to improve on results.
It seems, though, he will be in command for a little while longer, with No.1 target Emery instead deciding to stay in Spain with Villarreal.
talkSPORT understands Emery has decided to stay put following talks with the Villarreal board.
That no longer seems the case, with Villarreal are briefing the media in Spain that Emery is opting to stay.
The 50-year-old held talks with the board after Tuesday night's Champions League win against Young Boys and he has decided, talkSPORT are being told, to reject Newcastle's advances.
It's understood the Spanish coach was unhappy with the timing that their interest came out, on the day of a Champions League game.
It's suggested he is also not convinced by the direction the club want to go in and is concerned about the lack of 'clear vision' from their new owners.
Emery and Eddie Howe were down to a final shortlist of two to replace Bruce, and The Spaniard's camp believe that shows Newcastle are not completely certain on their direction, with the managers boasting very different playing styles.
It's now to be seen whether the club now turn to Howe to fill the position, with the former Bournemouth manager still seeking his next job after more than a year out of the game.
The news might come as surprise to Newcastle fans who will have felt quite optimistic that Emery was going to be their new man.
Speaking after his side's 2-0 Champions League win over Young Boys, the ex-Arsenal coach even confirmed that Newcastle were interested.
"The only certain thing is that Newcastle have shown an interest," Emery said after Villarreal's 2-0 Champions League win over Young Boys on Tuesday night.
"But I have not had more news than that interest.
"There's no offer. The offer would have to be via the club. I am focused on Villarreal. No more than that."
It is claimed, however, that a move for Emery is not completely off the table and could eventually go through next season instead - depending on Newcastle's next move.
It would be a shrewd appointment from the Toon, given the Spaniard's excellent track record in the Europa League and his previous experience in the Premier League.
The 50-year-old, who has also managed Valencia, Sevilla and PSG was appointed by Villarreal on a three-year deal in July last year.
Emery led the 'Yellow Submarine' to a seventh-place LaLiga finish and to Europa League glory in his first season - beating Manchester United in the final last term.
After beating Young Boys, Villarreal are second in their Champions League group, level on points with Man United.
On the domestic front, they have endured a testing start to the season and lie 13th in LaLiga having collected 12 points from their first 11 games.
Newcastle, meanwhile, are still yet to win a Premier League game in ten attempts this season, with the Magpies currently sitting 19th and six points adrift of safety.