The seven-times premiership coach said his decision was based around the vision and passion of new Knights billionaire owner Nathan Tinkler combined with the lifestyle offered by Newcastle and the Hunter region.
It's believed he phoned rival contender South Sydney on Tuesday morning to inform them of his decision to go to the Knights after finishing up with NRL premiers St George Illawarra at the end of this season.
"I sat down with Nathan (Tinkler) and was struck by his passion and knowledge of rugby league," said Bennett in a statement issued by the Tinkler Sports Group.
"Private ownership appeals to me. I like it. This guy wants to take Newcastle to another level.
"He wants our game to capture the imagination of the Hunter like never before - for the Knights to be the benchmark of rugby league in this country.
"That is the type of challenge that appeals to me.
"The Knights have already won two premierships and have been a great club despite struggling with their finances. And that's where Nathan Tinkler comes in."
The move means Bennett will have the chance to become the first coach to win premierships with three different clubs, having won six with Brisbane and one with the Dragons.
Bennett said the country NSW lifestyle appealed to him after living happily in Wollongong while coaching the Dragons and previously in Queanbeyan with the Raiders in 1987.
Bennett said he hoped current Knights coach Rick Stone would remain at the club and work there with him.
