
No financial details were given but Sky Germany reported the deal would cost Newcastle around £850,000 pounds with the option set at £8.5 million.
The 25-year-old former Tottenham Hotspur player told the Newcastle website he was happy to be returning to English football.
“I wanted absolutely to come back to the Premier League. The coach had some trust in me and the club also — I saw that straight away — and I think it’s the perfect move for me,” he said.
Newcastle manager Steve Bruce said he had followed Bentaleb, who was dropped from the Schalke first team for disciplinary reasons last March, from the player’s time at Spurs.
“He’s played at the highest level now for the last four or five years but he will come in hungry and feeling he has something to prove and will give us the competition we obviously need,” he said.
“We know that he can play and knows what the demands of the Premier League are. He’s gone from the Premier League to Schalke and played in the Champions League as well, so we’re delighted to get him. It’s a great signing.”
Newcastle are 12th in the league but have nine players injured. Bruce said on Monday that centre back Paul Dummett and on-loan left back Jetro Willems were out for the rest of the season.
The manager remained hopeful the club could complete a loan deal for Inter Milan winger Valentino Lazaro this week.