France international Cabaye signed a three-and-a-half-year contract with the Ligue 1 champions after an undisclosed fee - reported in France to be around £20million - was agreed to end his stay at St James' Park.
The loss was partially offset by the loan signing of Borussia Monchengladbach's Dutch striker Luuk de Jong but a direct replacement for Cabaye will also be required.
Grenier - whose 12 goals in 89 appearances for Lyon compare well with Cabaye's 17 in 79 for the Magpies - was one of a series of potential targets identified and Newcastle are now working to thrash out a deal which would see the 23-year-old plug the sizeable gap left in Pardew's team.
However, his current manager Remi Garde has voiced his hope that the player will not be sold this month, and it remains to be seen whether or not the Magpies can tempt Lyon to part with him.
There are no such doubts regarding De Jong, also 23, with Newcastle also negotiating an option to buy him in the summer after he passed a medical on Tyneside on Wednesday.
His arrival could hardly have proved more timely, with leading scorer Loic Remy suspended for the club's next three games and fitness concerns over Papiss Cisse and Yoan Gouffran.
Shoulder neither recover in time for Saturday's derby clash with Sunderland at St James' Park, manager Alan Pardew would face a major decision over whether or not to involve De Jong, who has not made a single start for Gladbach so far this season having been cast in the role of perennial late - and more often than not, very late - substitute.
However, De Jong said in a statement: "It has been a tough season for me so far, but I am here to play games and want to be important for the team, and successful with goals and assists.
"I am really looking forward to playing for Newcastle."
Cabaye, too, is desperate to get into action with his new club and could make his debut against Bordeaux on Friday.
He said at a press conference to unveil him, screened live on PSG's website: "The offer from Paris St Germain was hard to refuse.
"I want to win titles and PSG offer me that so it is an ideal club. I am proud to be a part of this ambitious project, to have the opportunity to win titles and play in the Champions League.
"I am desperate to start in the team and to represent Paris St Germain. I hope to to be able to play on Friday night."