The 66-year-old former Magpies manager met with the club's owner Mike Ashley on Sunday to sign the agreement.
Kinnear has told Sky Sports News that his main job will be to oversee the style of football that the club will be playing and he will deal mainly with player recruitment and transfers, on which he will have the final say.
He insists he will be there solely to help out current manager Alan Pardew, rather than replace him, and he is looking forward to sitting down and planning for the new season with Pardew.
Derek Llambias, the current managing director, will now be dealing more with the financial side of the club, with Kinnear dealing with the football side.
Kinnear managed Newcastle during the 2008/9 season but was forced to step aside after suffering a heart attack.
The Irishman, who has also managed at Wimbledon, Luton and Nottingham Forest, will travel up to Tyneside on Thursday and will be at the training ground on Friday to tie up some loose ends.
He told Sky Sports News: "It's absolutely done. I signed it with Mike today and that's taken care of. I think it is a very interesting role for myself and I don't think I could be at a better club doing it.
"I have been in discussions with Mike and once we clarified the situation and what my role would be, ie. in charge of transfers and looking at the strengths and weaknesses of the side that we have got and to help out Alan Pardew in every possible way that I can and use all the experience that I have from the game.
"I intend to meet Alan either tomorrow (Monday) or within the coming week to discuss the future and go through the team itself.
"Our target is that we have got to push ourselves up and try and do as well as we did a couple of seasons ago.
"I am as fit as a fiddle now. I am in the best physical shape that I have ever been and I have been waiting for the opportunity. I have had a great football career and I think I am ideal for this situation and I am looking forward to it.
"What I can offer is that I believe that I am a very good judge of players, I believe that I am a good tactician and I believe that anything to do with football I have been involved in; I've worked with the best, I have been with the best and I intend to make Newcastle far better than they are now.
"I think I have got a bright head, I think I can see a good player and know a good player and get the right players in for us to be successful.
"I have no other agenda - that is exactly what I want to do - and if I see players at the club right now and I believe they are not good enough to be at Newcastle then I intend to move them on."