The 54-year-old McClaren, who was in charge of Newcastle's north-east rivals Middlesbrough from 2001-06 before taking over as England boss, has agreed an initial three-year deal that could be extended to eight.
“I am privileged to be appointed head coach of Newcastle United,” McClaren said on the club website (www.nufc.co.uk).
“St James' Park is like a cathedral on a Saturday afternoon, a symbol for the city and I am excited to be given this opportunity.”
McClaren arrives at Newcastle after two seasons at Derby County, which ended in disappointment when they failed to make the Championship (second tier) promotion playoffs last month.
He was an unsuccessful manager of England, failing to qualify for the 2008 European Championship finals after replacing Sven-Goran Eriksson.
The Yorkshireman re-established his reputation, however, while working in the Netherlands with Twente Enschede.
“From my first meeting with Steve I knew he was the perfect fit for Newcastle United,” said Newcastle's managing director Lee Charnley.
“I am delighted that we have secured the services of one of the best coaches in English football.”
McClaren faces a major rebuilding job at a club that narrowly avoided relegation from the Premier League after a dreadful second half of the season.
Long-serving coach Carver was handed the reins at the turn of the year following Alan Pardew's move to Crystal Palace, but the team won only three games under his stewardship.
Despite keeping Newcastle in the top flight, Carver's long association with the club ended on Wednesday.
“After discussions with John it was mutually agreed that in the best interests of the club moving forward, and to enable the new head coach to build his own coaching team, we would go our separate ways,” Charnley said.
“He is a man of great character and dignity and will always be welcome at Newcastle United. We wish him every success in the future,” he added in a statement.
Carver said: “It has been a privilege to serve as head coach of this great football club. The fans and the region deserve a successful team and both myself and my support staff worked very hard with the squad that was available to us.”
Stone, a former England international, had been a coach at the club since 2010. – Reuters
Original source: McClaren named Newcastle boss