The hosts appeared to be on their way to a routine Premier League home success when Alexander Isak converted from the spot in the 23rd minute, however the Tricky Trees were a constant threat on the counter-attack throughout the afternoon and managed to complete a remarkable turnaround.
Newcastle have now lost back-to-back league matches for the second time in December and have been defeated in six of their last seven games in all competitions, leaving their chances of securing a top-four finish and Champions League football in serious jeopardy at the halfway point of the campaign.
Forest's first victory on the road since the trip to Stamford Bridge on September 2 means that they have leapfrogged Sean Dyche's Everton into 16th, sitting five points ahead of 18th-placed Luton Town ahead of the Hatters' match at relegation rivals Sheffield United later on Boxing Day.
Following a less-than-ideal defensive display and loss at Kenilworth Road against lowly Luton last time out, Eddie Howe was able to welcome Sven Botman back for his first start since September, whilst Sweden international Isak was preferred up front to Callum Wilson, who drew a blank in Bedfordshire.
As was the case under the stewardship of former boss Steve Cooper, Forest made a raft of changes to their starting XI ahead of a daunting-looking away match, with the suspended Willy Boly being replaced by Moussa Niakhate, whilst Gonzalo Montiel and Ola Aina also came into Tricky Trees' backline.
Despite dominating possession in the early stages and limiting the East Midlanders to moments on the break, Newcastle had to wait until the awarding of a penalty kick for their first shot on target in the contest, after full-back Aina was judged by referee Chris Kavanagh to have fouled Isak in the box as he tried to reach Lewis Miley's pass.
VAR had a look at the Nigerian's challenge and concluded there was insufficient evidence to overturn the on-field decision, so the former Real Sociedad man stepped up from 12 yards and rolled the ball past Matt Turner, who found himself flat-footed and eventually on his knees as the Magpies celebrated the opener.
Forest head coach Santo would have been fearing the worse after going one goal behind early on as Isak and Miguel Almiron threatened to double the hosts' advantage soon after, however the Tricky Trees should have been level in the 33rd minute, but Anthony Elanga opted to shoot instead of squaring the ball to an open Wood on the counter-attack.
The top-flight strugglers were able to restore parity in the fixture before the half-time whistle, though, with Morgan Gibbs-White's direct run leading to Elanga having possession of the ball, and the ex-Manchester United youngster showed great awareness this time around, finding Wood unmarked for a simple tap-in.
After being set up superbly by teammate Elanga prior to the break, New Zealand international Wood did most of the work to secure his second of the St James' Park contest, with the 32-year-old picking the ball on the left and fainting to come inside, before going around Dan Burn and dinking a delicate effort to evade the attentions of goalkeeper Martin Dubravka.
With Newcastle pushing for attacking opportunities that would allow them to claw back the two-goal disadvantage, Santo's Forest were being afforded even more space on the break and just seven minutes after sealing a brace Wood bagged his hat-trick, rounding Dubravka and slotting home following a perfectly-weighted long ball from centre-back Murillo.
A shock loss in the North-East leaves Newcastle seventh in the Premier League standings and seven points behind fourth-placed Tottenham Hotspur, who visit Brighton & Hove Albion on Thursday night.
Forest's final fixture of the festive period is a tasty-looking encounter with Erik ten Hag's Manchester United at the City Ground, and you feel that the Tricky Trees will be significantly more confident of defeating the Red Devils following a spirited display at St James' Park.