The Hatters were returning to Premier League action without their captain Tom Lockyer, who collapsed in their previous league outing to Bournemouth last week.
Meanwhile, Newcastle United came into the match looking to get their season back on track after being dumped out of two competitions in the space of a week.
The hosts were the better side in the opening 10 minutes and got the first chance of the match through Townsend, but his shot sailed over the crossbar.
As we headed to the midway point of the half, The Magpies began to settle and got their first opportunity when Miguel Almiron's effort deflected to Callum Wilson, who glanced his header narrowly wide.
The visitors kept up the pressure after that and almost got their reward when Wilson got on the end of an Anthony Gordon cross which looked destined for goal but Thomas Kaminski managed to pull off an excellent diving save to keep the scores level.
However, while Newcastle looked the more likely to open the scoring it was Luton who got their noses in front first against the run of play when Townsend nodded home at the back post from a well-worked corner routine.
The atmosphere around Kenilworth Road went up a notch after that and Ross Barkley almost lifted the roof off the stadium when he rifled a shot that beat Martin Dubravka but crashed off the woodwork and out.
The hosts regained the ascendancy in the game, playing neat and tidy football, and perhaps the only disappointment from from a Luton perspective would have been that they were not further ahead at the interval.
The Hatters picked up where they left off in the second half and almost doubled their advantage through Jacob Brown, but like Barkley, his shot crashed off the woodwork and out with Dubravka beaten.
The Magpies thought they levelled proceedings at the hour mark when Alexander Isak had the ball in the back of the net but after a VAR review, it was ruled out as offside.
It was one-way traffic from then as The Magpies piled the pressure on in the closing stages of the match, throwing everything into attack, but they were unable to find the equaliser.
Today's result made it five losses in six games in all competitions for Eddie Howe's side, who will face Nottingham Forest on Boxing Day, while The Hatters will head to Bramall Lane for a crucial relegation battle against Sheffield United.