The 23-year-old departs the French capital after just a single campaign with Les Parisiens, who he moved to from Sporting Lisbon during the summer window of 2023.
In just 12 months at PSG, Ugarte played 37 matches across all competitions, helping his former employers to glory in both Ligue 1 and Coupe de France.
The Uruguay international spent the majority of the summer in the United States, where Marcelo Bielsa's troops were gunning for Copa America glory, ultimately placing third.
Ugarte featured in all six matches for his country as they battled for pan-American success, earning a place in the team of the tournament.
Man United announce Ugarte signing
With 90 minutes remaining until the 11pm deadline, Man United confirmed the capture of Ugarte, ending his one-year stay at the Ligue 1 holders.
The 23-year-old has put pen to paper on a five-year deal with the Red Devils, committing him to the Old Trafford club until at least the summer of 2029.
There is also an option for Man United to extend Ugarte's terms by a further 12 months, meaning that the midfielder could be employed on this current agreement up to the conclusion of the 2029-30 season.
Speaking to the club's in-house media following the completion of the transfer, the Uruguayan revealed his excitement ahead of turning out for Erik ten Hag's side.
"It is an incredible feeling to join a club of this magnitude, one that is admired all around the world," said Man United's new midfielder.
"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 am 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."
Mainoo's new partner?
Boasting some of the best tackling statistics in European football last season, Ugarte has the tools to be a success in the engine room for Man United.
Supporters of the Red Devils will be excited at the prospect of the 23-year-old and academy graduate Kobbie Mainoo breaking up and controlling play from the double pivot in the middle of the park.
The need for Man United to secure the services of Ugarte was raised by the permanent departure of Scotland international Scott McTominay to Napoli earlier on deadline day.