The Magpies hold the option to make the move permanent for a fee that could rise to £35m at the end of the season.
Hall came through the Chelsea youth ranks and made his breakthrough into the first team last season, appearing eleven times in all competitions, including nine in the Premier League.
But the 18-year-old has declared himself a lifelong Newcastle United fan and is pleased to have made the move to Tyneside.
Commenting on the move, Hall said: "I'm very proud. Me and my family are Newcastle fans, and for me and my brother growing up, it was drilled into us that we were Newcastle. It's a big club and I can't wait to get started.
"I got a lot of experience last year in some big fixtures and I was really proud of the way I progressed as a player and a person. To now be here at Newcastle, the club that I've supported since I was a kid, I'm honoured and very proud to wear this shirt.
"It's very exciting. When you look back on last season and the way the team performed - not just the results, but the performances the team were putting in - it was amazing.
"There's so many talented players and we've got the Champions League now as well so there's many different competitions that I know the team will be wanting to do well in, and hopefully get a trophy or two as well."
Head coach Eddie Howe said: "I'm delighted to welcome Lewis to Newcastle United. He is a player we have tracked closely, as have a number of clubs, so it's very pleasing to secure him and to add a player of his quality, versatility and high potential to our squad.
"I'd like to thank everyone involved for their tireless work to bring in the players we have.
"A lot of time, effort and resource goes into a transfer window, but we have a real togetherness at all levels here and I appreciate that teamwork and support."
