The deal includes an option for the Tyneside club to make the move permanent until the end of the season.
Bentaleb has not played for Schalke’s first team since he was suspended for alleged indiscipline in April last year.
The 25-year-old Algerian international makes a return to the Premier League, where he made 66 appearances for Spurs before leaving for Germany initially on loan in 2016.
“I’m very happy to come back to the Premier League, especially with a club such as Newcastle,” Bentaleb said after completing his move.
“The project really interested me. 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.”
Newcastle head coach Steve Bruce said: “He’s somebody who I paid particular attention to when he was at Spurs, when he broke through and got a big-money move to Germany.
“With the numbers that we’ve got at the minute, he’s got a bit of experience and I think people will enjoy watching him play.
“He’ll come into the squad and I’m sure he’ll be a good acquisition for us.
“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.”
