The 58-year-old Tyneside native will be joined at St. James’ Park by coaches Steve Agnew and Stephen Clemence.
Bruce said: “I’m delighted and incredibly proud to be appointed as head coach of Newcastle United. This is my boyhood club and it was my dad’s club, so this is a very special moment for me and my family.
“There is a huge challenge ahead of us, but it’s one that my staff and I are ready for. We’ll roll our sleeves up and we’ll be giving it everything from the off to ensure supporters have a successful team that they can be proud of.”
Lee Charnley, managing director at Newcastle, said: “Steve has a deep affection for Newcastle United and we are very pleased that a coach with his vast experience and connections to the club and city has joined us.
“Steve knows what this club means to supporters and to the region and he will put his heart and soul into leading our talented group of players with the full support of our staff.”
Bruce and his staff are scheduled to travel to China on Wednesday and will be in charge of their Premier League Asia Trophy match against Man City or West Ham on Saturday,
In a 21-year coaching career, Bruce has taken charge of a further nine clubs, most notably Newcastle’s north east rivals Sunderland.