Northampton born Toney started his career at his hometown club.
After rising through the youth ranks he became the Cobblers youngest ever player when, at the age of 16, he came on as a substiture in an FA Cup game against Bradford City in November 2012.
He made 60 appearances for Northampton Town, scoring 13 goals, before securing a move to Newcastle United in 2015.
Toney made two substitute appearances for The Toon last season and also enjoyed two loan spells with Barnsley, helping them to EFL Trophy and League One Play Off success.
He joins Town until January 2017.