The manager admits he could not stand in the midfielder's way after he revealed his desire to leave and is now keen to bolster the squad ahead of Friday's transfer deadline
The midfielder is set to join Ligue 1 champions Paris Saint-Germain in a deal worth £20 million, and the former Southampton boss says he could not deny the France international a "dream" move after he made clear his desire to leave.
The Magpies drew 0-0 with Norwich City at Carrow Road on Tuesday night, and while Pardew is now facing up to life without the midfielder, he hopes the club will reinvest the money as they did after selling Andy Carroll to Liverpool for £35 million in 2011.
"We looked a little bit different tonight without Cabaye, but in a good way. This club is never going to be about one player," he told reporters.
"Cabaye would probably get in my all-time Newcastle XI. For us he was outstanding. We wish him the very best and I hope our fans do.
"He wanted to leave. We were honourable to him. He’s got a dream move and we have to use that money wisely now, like we did with Andy Carroll.
"In that summer, we brought in Yohan and a couple of others that took us forward, so that is how we’re going to have to try to break into the Champions League places now."
Newcastle are set to complete the loan signing of Borussia Monchengladbach striker Luuk de Jong pending a medical, and Pardew is keen for more new arrivals before Friday's transfer deadline.
"I hope we can bring in some new faces before Friday," he continued. "I was on the phone to the powers that be today, saying ‘let’s get moving, let’s see what we can get’.
"We obviously have one or two targets that we had earmarked if he left, and we’re chasing those down. Luuk de Jong we’re hoping will have a medical tomorrow. He’ll come on loan.
"He’s a player we really liked when he was in Holland. He scored a lot of goals. He went to Germany and it hasn’t quite happened for him, so this gives him a second opportunity and we hope he takes it."