Ugarte joins Old Trafford on a five-year deal for an initial fee of £42.2m, with a further £8m in performance-related add-ons.
It follows lengthy negotiations all summer between the Red Devils and PSG, who Ugarte only joined a year ago from Sporting Lisbon for £51.1m.
United initially explored a loan deal with an obligation to buy but Scott McTominay’s proposed £25m move to Napoli has now allowed the club to agree a fee for the Uruguayan interntional.
The 23-year-old will be Erik ten Hag’s fifth signing of the window after defensive trio Leny Yoro, Matthijs de Ligt and Noussair Mazraoui as well as Dutch striker Joshua Zirkzee.
Despite an impressive start in the French capital, PSG boss Luis Enrique favoured Vitinha and Fabian Ruiz in the second half of the campaign.
Ugarte enjoyed a fruitful summer for Uruguay and was named in the Copa America team of the tournament and now arrives at Old Trafford to bolster Ten Hag’s midfield options.
Casemiro has partnered Kobbie Mainoo in midfield for the first two Premier League games, but United are otherwise short of options following the end of Sofyan Amrabat’s loan and the expected departure of McTominay.
Ugarte could be in line to make his club debut in the league when United host Liverpool on Sunday at Old Trafford.
‘It is an incredible feeling to join a club of this magnitude; one that is admired all around the world,’ he said after joining.
‘The project that the football leadership discussed with me is extremely exciting; Manchester United is an ambitious club and I am an ambitious player.
‘The passion of supporters is something that is very important to me; I know how incredible United fans are and I cannot wait to experience Old Trafford.
‘I’m someone who is so determined to succeed; I will sacrifice and give everything for my teammates. Together we will fight to win trophies and reach the level where this club needs to be.’
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