Rovers slipped to their eighth defeat in 10 league games to plunge into the relegation zone and prompt McGhee's dismissal less than a year after his arrival.
The 55-year-old saw his side ship four goals inside the opening 33 minutes to seal his fate.
Garry Kenneth's 14th-minute own goal was cancelled out by Tom Eaves a minute later but that was as good as it got for Rovers.
Within four minutes they were 3-1 down to goals from Ashley Chambers and Jason Walker. Chambers grabbed his second in the 33rd minute to secure York's third home league win of the season.
McGhee had two spells at Newcastle and they couldn't possibly have been so different.
He came from Morton for £150,000 in 1977 and looked as though he had the skill to make it, but often failed to deliver.
He went to Aberdeen and became a legend.
Capped by Scotland, he won Scottish Championships and Scottish Cups with both Aberdeen and Celtic, as well as European Cup Winners Cup medal with Aberdeen.
In 1989 he returned to St James' Park in a £200,000 deal and hit it off with Micky Quinn straight away.
In total he scored 36 goals in 99 starts for Newcastle, and made 13 substitute appearances.