This report documents a Newton formulation of MODFLOW-2005, called MODFLOW-NWT. MODFLOW-NWT is a standalone program that is intended for solving problems involving drying and rewetting nonlinearities of the unconfined groundwater-flow equation. MODFLOW-NWT must be used with the Upstream-Weighting (UPW) Package for calculating intercell conductances in a different manner than is done in the Block-Centered Flow (BCF), Layer Property Flow (LPF), or Hydrogeologic-Unit Flow (HUF; Anderman and Hill, 2000) Packages. The UPW Package treats nonlinearities of cell drying and rewetting by use of a continuous function of groundwater head, rather than the discrete approach of drying and rewetting that is used by the BCF, LPF, and HUF Packages. This further enables application of the Newton formulation for unconfined groundwater-flow problems because conductance derivatives required by the Newton method are smooth over the full range of head for a model cell. The NWT linearization approach generates an asymmetric matrix, which is different from the standard MODFLOW formulation that generates a symmetric matrix. Because all linear solvers presently available for use with MODFLOW-2005 solve only symmetric matrices, MODFLOW-NWT includes two previously developed asymmetric matrix-solver options. The matrix-solver options include a generalized-minimum-residual (GMRES) Solver and an Orthomin / stabilized conjugate-gradient (CGSTAB) Solver. The GMRES Solver is documented in a previously published report, such that only a brief description and input instructions are provided in this report. However, the CGSTAB Solver (called _XMD) is documented in this report. Flow-property input for the UPW Package is designed based on the LPF Package and material-property input is identical to that for the LPF Package except that the rewetting and vertical-conductance correction options of the LPF Package are not available with the UPW Package. Input files constructed for the LPF Package can be used with slight modification as input for the UPW Package. This report presents the theory and methods used by MODFLOW-NWT, including the UPW Package. Additionally, this report provides comparisons of the new methodology to analytical solutions of groundwater flow and to standard MODFLOW-2005 results by use of an unconfined aquifer MODFLOW example problem. The standard MODFLOW-2005 simulation uses the LPF Package with the wet/dry option active. A new example problem also is presented to demonstrate MODFLOW-NWT's ability to provide a solution for a difficult unconfined groundwater-flow problem.