The French playmaker had fallen out of favour at St James's Park but has been offered a shot at redemption by Steve Bruce.
Ben Arfa's arrival caps a busy day of transfer activity for the Tigers, who also brought in Abel Herandez for a club-record fee and Uruguayan team-mate Gaston Ramirez on loan from Southampton.
"Hatem is a superb addition to the squad, and brings a lot of attacking flare,” Bruce told the club's official website.
"We look forward to welcoming him to the Ccub."
The 27-year-old is yet to make an appearance for Alan Pardew's side this season having had his No. 10 shirt taken off him to be replaced by the No. 26 jersey.
He leaves Tyneside having made 72 Premier League appearances for the Magpies, scoring 12 goals.