The 24-year-old, who has been in the Magpies' sights since they tried to sign him as a replacement for Yohan Cabaye in January, becomes Alan Pardew's fourth summer acquisition after Siem de Jong, Jack Colback and Ayoze Perez.
The France international jetted into Tyneside from his post-World Cup finals holiday in Corsica on Sunday, 48 hours after Montpellier president Louis Nicollin had revealed that a deal was all but done.
Newcastle were cautious as they worked to thrash out the remaining details, but their optimism was rewarded when they finally got their man.
Cabella said: "It is great to finally be a Newcastle player.
"This is a move that I really wanted to make as I have heard nothing but good things about Newcastle United from everyone I spoke to.
"I wanted to join a great English club and that is why I have arrived here. I'm looking forward to pulling on the shirt and playing in this magnificent stadium, and I will give this club my maximum."
Newcastle manager Pardew said: "Remy is a player who has been on our radar for a while and we are delighted to bring him to the club.
"He is a player who I am sure will excite our fans. He has flair, hard work and commitment, and is going to bring a talent, energy and quality to St James' Park that our supporters will enjoy.
"Remy has great ideas when the ball comes to him, and along with Siem de Jong is going to improve an area where we definitely needed some help."
Sky Sports understands that the deal has cost Newcastle just over £7million.