Neustadt extends on both sides of the Spree. The river Struga enters the Spree north of the village. With about 400 inhabitants, the village is the largest within the municipality of Spreetal. Neustadt is surrounded by vast forests. The Bundeswehr Upper Lusatia military training area lies south of the village.

Neustadt was first documented in 1433. Since 1544, the village belongs to the lordship of Hoyerswerda. It retains its Sorbian character to this day. The location on the border between the language areas of Hoyerswerda, Schleife and Nochten has given rise to a distinct Sorbian dialect. Neustadt is the smallest village within the working group ‘Neustadt in Europe’ that comprises 37 towns and municipalities with the same name. The Neustadt meetings take place at regular intervals.

Neustadt constitutes the eastern part of the municipality Spreetal. The latter was formed in 1996 and moreover comprises the villages of Burgneudorf (town hall), Burg, Burghammer, Spreewitz, Zerre and Spreetal. The southern section of the Schwarze Pumpe industrial park, the former gas combine, also belongs to the municipality. Spreetal is part of the Lusatian Lake District. Spreetaler See (former Spreetal-Nordost opencast mine) is being developed to become the region’s water sports centre. The municipality moreover has a share in the lakes Bernsteinsee and Scheibe See. Several well-developed cycle routes invite cyclists to explore this region.