Simpson has had loan spells at Royal Antwerp, Sunderland, Ipswich and Blackburn since signing with the United academy in July 2003.
The news will no doubt be welcomed by Newcastle players and supporters who have had to witness the club's most turbulent 12 months which, in May, resulted in relegation to the Championship.
This summer has also seen a host of big names leave St James' Park as the club bids to reduce its annual wage packet.
Michael Owen moved to Manchester United on a free in an attempt to secure himself a place at next summer's World Cup, while the likes of Sebastien Bassong, Obafemi Martins and David Edgar also moved on.
The club's future has been hanging in the balance since the end of last season after owner Mike Ashley put it on sale for the cut price of £100 million.
His attempts to relinquish all links with the club have so far failed, as have attempts to convince him to install Alan Shearer as permanent manager.
Having opened their season in the Championship with a draw against West Brom last weekend, current care-taker manager Chris Hughton is widely expected to throw Simpson in at the deep end and name him in his starting line up for this Saturday's clash against Reading.