The defender joins the Heed on a one-year deal having spent last season with National League side Chesterfield, where he made 13 appearances in the league.
Earlier in his career, the 39-year-old spent six seasons with Hartlepool United where he made 272 appearances before departing in 2009 – including a Wembley appearance in the 2005 League One play-off final.
The centre-back has a wealth of Football League experience to his name for a number of other clubs including Norwich City, Scunthorpe United, Bradford City, Cambridge United and Barnet.
Nelson, who spent a period on trial with the club during pre-season, told gateshead-fc.com why he opted to make the move back home to the North-East.
“I came into the club at first to keep my fitness and make sure I was ready for the start of the season with whatever happened,” he said.
“Once I came in and saw how the club was being run and how it was, everything seemed to fit.
“It’s also nice to be back home, I haven’t been back home for a while so seeing the family on a regular basis is a massive draw, as well as the club itself.”
Nelson will be taking on a role similar to that undertaken by Mike Williamson during the latter half of last season, with the former Hartlepool United man working with the coaching staff as well as making himself available for selection.
“I’ll be planning and taking training sessions alongside Ian and Mike,” he added.
“I’ll also be training, keeping fit and making sure I’m ready to challenge for a place in the team, so it’s going to be me and Mike doing pretty much the same thing in terms of making sure we’re ready to play, but also having an input in terms of the coaching side of it as well.
“I just want to try and have as big an impact as I can, be that on the field or off the field.
“The last two or three seasons I’ve been leaning towards more coaching, so to develop myself as a coach is the aim as that’s the way I’m going to go eventually, but also have an impact on the pitch when I do play.”