Production of all brewing operations from the site will move to John Smith’s at Tadcaster in North Yorkshire.
S&N said it was “committed” to the Newcastle Brown brand and would continue to promote it in the north east of England.
Production of Newcastle Brown transferred to Dunston four years ago when the Tyne brewery in Newcastle closed.
S&N said it had needed to revise its long-term plans to keep Dunston open because “a significant downturn in the economy and the UK beer market has resulted in a surplus of brewing capacity in the industry”.
Cost savings are also being proposed for Tadcaster, along with the company’s brewery in Manchester and the Bulmers cider plant in Hereford.
Operations director Paul Hoffman said: “The proposal to close Dunston is a not a decision we have taken lightly.
“Nor is it a reflection on the employees at the site who have done an excellent job over the last few years in a challenging market.
“The Dunston site is currently running at around 60% capacity and our ability to consolidate beer production on to other sites presents a strong case for closure.”