Bruce, who hails from the area, has signed an initial three-year contract at St James' Park.
"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," the 58-year-old ex-Manchester United captain told NUFC.co.uk.
"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," he added.
Newcastle managing director Lee Charnley commented: "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.
"The hard work for Steve and his team starts immediately and we will be fully prepared for the challenge of a new Premier League season."
Bruce has left Championship club Sheffield Wednesday to take the Newcastle job, while he has previously also managed Hull and Wigan in the Premier League.