Mitrovic spent the second half of the last campaign at Craven Cottage, helping the club secure promotion to the Premier League via the Championship playoffs.
"Mitro's back - and he's here to stay", the club stated on Twitter.
Newcastle will likely make a profit on the £14.5 million they paid Anderlecht for his services in July 2015.
"I'm very glad and happy and proud to finally be here and officially become a Fulham player". He scored 17 times in 72 games for the Magpies. "I'm happy to the moon and back", he told Fulham's official website.
'I have love for the fans.
Fulham are in advanced talks with the defender after the two clubs agreed on a fee in the region of £25m.
A loan may suit the Toon's needs while one of their players is injured, but this stance is not going to get them anywhere - and they must cough up or face losing out on him for good.
The 26-year-old featured for his nation at the World Cup and will arrive on Tyneside to hopefully strengthen the Magpies in the final third, after Benitez's side struggled for consistency in front of goal last season.