Neotame is one of six non-nutritive sweeteners and one of five artificial sweeteners approved by the FDA. Neotame derives its name from its molecular formula, a combination of a 6-carbon neohexyl group to the amine nitrogen of aspartame. This molecular combination gives neotame better stability over aspartame, with enough heat stability to be used in baking applications.  It is the sixth oldest known sugar substitute – preceded by saccharin, cyclamate, aspartame, acesulfame potassium, & sucralose – to gain FDA approval, dating back to its discovery by Prof. Claude Nofre & Dr. Jean Marie Tinti – under NutraSweet (they also developed aspartame), which was owned by Monsanto at the time – in 1990. [1 & 2]
There is an unofficial history of neotame floating around the internet, but there doesn’t seem to be any factual evidence to back up the story. The most I could find on neotame was its discovery in 1990 and the involvement of NutraSweet orchestrating the research to discover it. At the time, Monsanto owned NutraSweet, but “J.W. Childs Equity Partners II, L.P. today owns the NutraSweet Company, which includes ownership of neotame as well.”  The same source that supplied the unofficial history also says “the chemical formula for neotame was published in the February 10, 1998 Federal Register.” 
Food Standards Australia New Zealand (FSANZ) approved neotame for general use in foods and beverages in 2001.  It was then approved by the FDA in 2002 as a general purpose sweetener, except that it cannot be used in meat and poultry.  JECFA confirmed the safety of neotame in 2003.  It is approved in the EU as E961.  The Orthodox Union (OU) certifies neotame as kosher and pareve. [PDF4] Some internet chatter included talks about neotame being included in certified organic products, which resulted in the USDA to assure the general public that neotame is not allowed in certified organic products. The Center for Science in the Public Interest (CSPI) has listed neotame as safe (PDF) – also including its ratings for other sweeteners.
Neotame is not sold to the consumer market, nor is it sold commercially due to how relatively new it is. It is mainly used by food producers and is the cheapest artificial sweetener – 10% the cost of sugar and 30% the cost of HFCS – which reduces the cost of production. It also is used to sweeten cattle feed.  The idea of sweetening cattle feed may raise concerns on why the feed needs to be sweetened, but that has nothing to do with neotame as a useful product. While neotame can function as a stand-alone sweetener, it lends itself particularly well to blending with other sweeteners, including both nutritive and non-nutritive sweeteners. Food and beverage companies will have the flexibility to determine its use on a product-by-product basis.  This is especially true when neotame comes on the consumer market and becomes more commercially used. Lastly, as a dry ingredient “neotame has excellent stability and will function well in finished dry products such as powdered soft drinks and dessert mixes.” [PDF2] Also as a dry ingredient neotame “was evaluated for five years. When stored under conditions relevant to commercial use (25°C and 60% relative humidity), virtually no loss of neotame occurred. [PDF3]
Neotame is between 7,000 and 13,000 times sweeter than sucrose and 30 to 60 times sweeter than aspartame.  With such sweetening power, “only about 6 mg of neotame is needed to sweeten a 12-ounce serving of beverage.” Since there is such a tiny amount used neotame is not required to be listed on ingredients. [PDF] There is “little or no off-taste, except that, at high sweetness levels, it has a slight licorice-like cooling effect in the mouth. Its sweetness is slower in onset than sucrose, and it lingers significantly at high sweetness levels.”  The neotame site brochure claims, “neotame has a clean sweet taste like sugar.” [PDF] A study also found that “after chewing mint-flavored chewing gum for 20 minutes, sensory panelists reported the neotame-sweetened chewing gum to be significantly sweeter and have more mint flavor than samples sweetened with other sweeteners, including sugar.” [PDF]
To understand exactly what neotame is, and the relationship it has to aspartame, it’s good to know what’s going on chemically. Due to the presence of the 3,3-dimethylbutyl group, peptidases, which would typically break the peptide bond between the aspartic acid and phenylalanine moieties, are essentially blocked, thus reducing the availability of phenylalanine (Sweeteners Holdings, Inc., 2002). In plain English this means, “individuals with phenylketonuria may consume foods and beverages that contain neotame, and no special labeling for phenylketonuria is needed on products with neotame.” [PDF] This is a great benefit of neotame, as aspartame is not safe, and requires a label, for people with phenylketonuria – a rare disease. Dr. Mercola argues that 3,3-dimethylbutyl sounds hazardous to our health, because it, “is categorized as both highly flammable and an irritant, and carries risk statements for handling including irritating to skin, eyes and respiratory system.” However, the handling of this chemical may have nothing to do with the processes in our bodies, especially in trace amounts. Another source says the U.S. Environmental Protection Agency (EPA) has listed 3-dimethylbutyl as one of the most hazardous known chemicals, which may be the same hazards Dr. Mercola listed. Further more, neotame is completely eliminated from the body with recovery in urine and feces within 72 hours (European Food Safety Authority, 2007). This is because neotame is not metabolized by the body, as the chemical combination is unique.
A concern with neotame, which also extends to aspartame, is the methanol byproduct. Reading around the internet will mention the conversion of methanol into formaldehyde, which can be called a deadly toxin. Here is a good article on how methanol works once it enters the body, and why it shouldn’t be a concern in aspartame or neotame. In direct response to neotame, “the amount of methanol derived from neotame is exceedingly small relative to the amount of methanol derived from common foods such as fruits and vegetables and their juices. For example, the amount of methanol provided by tomato juice is about 200 times greater than that from neotame in a beverage.” [PDF] The key here is to realize how little neotame is used to sweeten products.
More safety studies can be found in the neotame brochure, which I’ve copied below:
No toxicological effects were observed, even with amounts up to 40,000 times the expected daily intake (0.1 mg/kg body weight) for high-level consumers (90th percentile). This dosage of neotame is approximately equivalent to consumption of one of the following by an adult human, every day for a lifetime: 50,000 cans (12 oz.) of beverage with neotame or, 280,000 packets of tabletop sweetener with neotame or, the sweetness equivalence of 1,000 (5 lb.) bags of sugar. 13-Week Tolerance Study: A randomized, double-blind, placebo- controlled, parallel design study was done in healthy adult male and female subjects. Subjects received either 0.5 mg/kg body weight of neotame or 1.5 mg/kg body weight of neotame or placebo daily for 13 weeks. The 1.5 mg/kg body weight dose is equivalent to the amount of neotame in about 6 liters of beverage sweetened 100% with neotame consumed every day by an adult. The results confirm that, even in amounts 15 times the projected daily consumption by high-level (90th percentile) consumers, neotame is safe, well tolerated, and not associated with adverse health effects.
Although scientific research and evidence seems to prove neotame as a safe product it is still relatively new. Like putting any chemical in our bodies, it’s an experiment and it’s different for everyone. Some people may have reactions to neotame when it is added to the market on a massive scale. Long term effects – think decades – of using neotame, like any other artificial sweetener, may have uncertain or unwanted consequences. But with that said, currently it looks like neotame is safe and can be recommended to people of all ages.