The 21-year-old has previously had loan spells with MK Dons, Sheffield Wednesday and Carlisle.
Town manager Graham Turner has admitted that he had to bide his time before signing Tavernier.
"He's one we've chased from the end of last season, but Newcastle thought he would end up at a Championship club," Turner told the Shropshire Star.
"That didn't materialise so we've had the opportunity to bring him down here now. Whenever we've seen James, the scouts have been impressed with him.
"He's good going forwards and he's a decent defender."
Source: Newcastle United Mad