The Gunners started the day two points behind Tottenham Hotspur in the table and in the knowledge that fourth place and a spot in the Champions League was still in their own hands.
However, Mikel Arteta's side were bullied, outfought and outplayed by the Magpies at St James' Park and were fortunate not to have conceded before the half-time whistle blew.
Arsenal must now pray for a miracle on the final day of the season to qualify for the Champions League, but Xhaka does not believe that his side's showing on Monday even warrants Europa League football.
"So difficult to find the right words, we came here to show a different game but from the first minute to the 90th we didn't deserve to be on the pitch," Xhaka told Sky Sports News.
"I cannot explain to you why [our performance was poor]. We didn't do what the gameplan was, not listening to the coach and doing our own things, and when you do your own things these games happen.
"What happened was a disaster performance. Like this you don't deserve to play Champions League, you don't even deserve to play Europa League. It's very hard to take it at the moment, I don't know why we are not doing what the coach is asking from us.
"If someone isn't ready for this game, stay at home. Simple as that. Doesn't matter the age - you can be 30, you can be 35, you can be 10, you can be 18, if you are not ready for that or nervous, stay on the bench or stay at home. Don't come here.
"We need people to have balls, sorry to say that, to come here to play because we knew this game was one of the most important games for us. When you perform like this, it's unacceptable.
"I feel very very sad for us, very disappointed and very very sorry for the people that came over here to support us, the Arsenal supporters. This is not the way we wanted to go, I can only say sorry to them, I don't have any other words."
Arteta also insisted that he could not defend his side's performance on the night, claiming that the showing was "nowhere near" the required standard to play in the Champions League.
Takehiro Tomiyasu was also withdrawn with an apparent hamstring problem on a dire evening for Arsenal, whose Champions League hopes are not dead and buried just yet.
The Gunners will welcome Everton to the Emirates Stadium on the final day of the season, but Tottenham realistically only need a point against basement side Norwich City to clinch a top-four place. body check tags ::