The Magpies have been busily recruiting a series of French players this week and Haidara will join compatriots Mapou Yanga-Mbiwa and Yoan Gouffran at St James' Park, with Moussa Sissoko expected to follow.
Haidara made his debut for Nancy on 11 December 2010 and has gone on to make more than 50 appearances, as well as bring capped by France at several age-group levels.
He will wear number 19 at Newcastle and could make his debut at Aston Villa next Tuesday.
Haidara said: "It was the desire of the club to sign me up which was the most important factor.
"It was nothing to do with the league position. It was really all about the club's desire and willingness to sign me up.
"Also, I like the club's ambition to strengthen the whole team, so we can improve our league position. That's what appealed to me, so I didn't hesitate."
Newcastle boss Alan Pardew said: "Massadio is very highly thought of in France and he's somebody who our scouting team have been greatly impressed by.
"At the age of 20, he will only continue to get better, but he's already played a lot of games in his country's top division and represented France at under-19, under-20 and under-21 level.
"He's strong and quick and we're looking forward to seeing him develop here."