Newcastle took an early lead when Sean Longstaff tucked in Alexander Isak's pass, but the Sweden international was adjudged to be offside.
The linesman flagged immediately after the goal had gone in, but by then, the damage was done.
Longstaff had crashed into Ederson as he lunged for the ball, leaving the Brazilian stricken and, while he tried to play on, he was forced off early in the game.
And City fans were left raging with the offside flag held by the linesman as a result of Premier League rules.
One fan wrote on social media: "This Ederson injury has to be the last straw for the stupid rule of not instantly calling obvious offsides."
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Another said: "The delayed offside rule is a joke, Ederson injured over stupid rule."
And this fan said: "Man City being done over by the offside flag rule. First Stones now Ederson. Awful rule."
While a fourth put: "Rodri and Foden calling for Ederson to be subbed off. F*** this bloody offside rule. If he is clearly off, show the f****** flag!!!"
Ederson's injury could add to a growing list of key players that are missing at the Etihad.
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News broke this week that Erling Haaland is set to miss the rest of January through injury.
And John Stones is another whose fitness problems continue to plague him while defensive partner Manuel Akanji is also out.
Kevin de Bruyne has given Pep Guardiola a timely boost, though, and was named on the bench against Newcastle on Saturday.
City are out of action for a fortnight after this weekend and next play Tottenham in the FA Cup on January 26.