"Michael is a world class forward with a proven goalscoring record at the highest level and that has never been in question," said manager Alex Ferguson [ Images ].
"Coming to Manchester United with the expectations that we have is something that Michael will relish," he added on the club's official website (www.manutd.com).
Owen, 29, had been out of contract after deciding to leave relegated Newcastle United and becomes Alex Ferguson's second signing of the close-season following Ecuador winger Antonio Valencia's move from Wigan Athletic on Tuesday.
The ex-Liverpool striker has struggled for form and fitness in four years at Newcastle, scoring just 30 goals, and has been consistently overlooked by England [ Images ] manager Fabio Capello [ Images ].
Owen, seventh on the list of all-time top scorers in the Premier League with 144, had been linked by British media with a move to Hull City last week but will instead replace Argentina forward Carlos Tevez [ Images ] who left United last month.
"I had just begun to talk to other clubs when out of the blue Sir Alex phoned me on Wednesday afternoon, invited me to have breakfast with him next morning during which he told me that he wanted to sign me," Owen said.
"I agreed without a moment's thought."
The 2001 European Footballer of the Year, who has scored 40 times in 89 appearances for his country, shot to fame as a goalscoring teenager with Liverpool and England before joining Real Madrid [ Images ] in 2004.
He had a single season at the Bernabeu [ Images ] where he failed to hold down a first team place amongst the "galacticos," before moving on to Newcastle in 2005 who were relegated to the Championship (second division) in May.
Owen will be reunited with striker Wayne Rooney [ Images ] whom he successfully partnered in attack for England before injuries curtailed his international career.
"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," Owen added.