In this paper, the stability of Newtonian and non-Newtonian viscoelastic collisional shear-velocity dusty plasmas is studied, using the framework of a generalized hydrodynamic (GH) model. Motivated by Banerjee et al.’s work (Banerjee et al., New J. Phys., vol. 12 (12), 2010, p. 123031), employing linear perturbation theory as well as the local approximation method in the inhomogeneous direction, the dispersion relations of the Fourier modes are obtained for Newtonian and non-Newtonian dusty plasma systems in the presence of a dust–neutral friction term. The analysis of the obtained dispersion relation in the non-Newtonian case shows that the inhomogeneous viscosity force depending on the velocity shear profile can be the genesis of a free energy source which leads the shear system to be unstable. Study of the dust–neutral friction effect on the instability of the considered systems using numerical analysis of the dispersion relation in the Newtonian case demonstrates that the maximum growth rate decreases considerably by increasing the collision frequency in the hydrodynamic regime, while this reduction can be neglected in the kinetic regime. Results show a more significant stabilization role of the dust–neutral friction term in the non-Newtonian cases, through decreasing the maximum growth rate at any fixed wavenumber and construction of the instable wavenumber region. The results of the present investigation will greatly contribute to study of the time evolution of viscoelastic laboratory environments with externally applied shear; where in these experiments the dust–neutral friction process can play a considerable role.