The Mercury Prize shortlist and winner is decided by a panel of industry experts.
Unlike the Brit Awards, which recognise commercial success, the Mercury Prize seeks to reward artistic achievement.
Primal Scream were the first winners, in 1992, with the accolade going to Leeds band English Teacher last year. PJ Harvey, in 2001 and 2011, remains the only multiple winner.
Welcoming the award to Newcastle, the council said it was "another string to the bow" for the city, while North East Mayor Kim McGuinness said it would give the "opportunity to showcase our home-grown talent".