A born and raised Geordie, Shearer scored 206 goals in 404 appearances during a 10-year playing stint at Newcastle to earn legendary status on Tyneside after joining for a record £15m fee from Blackburn.
He retired from playing in 2006 and made no secret of his desire to move into managing at some stage.
Now with Newcastle in the bottom three, the former England captain has decided the time is right to take his first coaching role.
Former Newcastle chairman Freddy Shepherd was among a clutch of figures associated with the club to welcome Shearer's appointment.
He told BBC Radio 5 Live: "It's great news. Newcastle are in a fight now, they're in the trenches, and I think Alan is the guy to carry on that fight."
Former Newcastle midfielder Paul Gascoigne believes Shearer's standing will have a positive effect on the players.
Archive - Shearer joins Newcastle in 1996
"Alan's blood is black and white and he'll be telling the players that," he said.
"He's got eight games to keep them up and I don't think it'll be too difficult a task. All they've got to know is that they're playing for Alan Shearer, Newcastle United and the fans."
Newcastle have lurched from one crisis to the next on and off this pitch this season following the departure of Kevin Keegan early in the campaign following a row with the board over summer transfers.
His replacement, the veteran Kinnear, required triple heart bypass surgery in February, leaving Hughton to pick up the baton on a temporary basis.
Following a fans' backlash over Keegan's exit, Ashley raised the possibility of selling the club, before deciding to stay on.
On the pitch, striker Michael Owen has been involved in just four games this year because of an ankle injury, while Charles N'Zogbia moved to Wigan in the January transfer window after a high-profile bust-up with Kinnear.
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