Owen, 29, spent the day at United's Carrington training complex as the terms of his free transfer were thrashed out, after he lapsed out of contract with Newcastle at the end of last month.
Sir Alex Ferguson: "Michael is a world-class forward with a proven goalscoring record at the highest level and that has never been in question.
"Coming to Manchester United with the expectations that we have is something that Michael will relish."
It is believed Ferguson has struck a pay-as-you-play deal which will involve a basic weekly wage enhanced by bonuses.
The player has taken a significant pay cut from the £110,000 he was reported to be on at Newcastle.
Owen: "I had just begun to talk to other clubs when out of the blue Sir Alex phoned me and invited me to have breakfast with him next morning during which he told me that he wanted to sign me.
"I agreed without a moment's thought. This is a fantastic opportunity for me and I intend to seize it with both hands.
"I am now looking forward to being a Manchester United player and I am fortunate that I already know so many of the players here.
"I want to thank Sir Alex for the faith he has shown in me and I give him my assurance that I will repay him with my goals and performances."