Blair moved to Brive last summer after a decade with Edinburgh, but will leave the French club to return to Britain.
The 31-year-old, who retired from international duty in January as Scotland's most capped scrum-half with 85 appearances to his name, will join up with the Falcons in the summer.
Dean Richards' side look well set to make an immediate return to the Aviva Premiership following last season's relegation; they currently lead the Championship table by 26 points with the play-offs looming.
Blair, a Lions tourist in 2009, said: "Newcastle have ambitions to challenge in the Aviva Premiership, and although there are still the play-offs to be played, they are in a good position to be promoted and to achieve this goal.
"I am really enjoying my time in France but I feel that playing with Newcastle Falcons will provide me with a rugby challenge that I have been looking for."
- Sports & Recreation