The Australia international has been deemed surplus to requirements at the King Power Stadium, where Wout Faes, Conor Coady, Caleb Okoli and Jannik Vestergaard are all competing for minutes in defence.
After playing just four times for the Foxes in all competitions last season, Souttar - who stands at 6ft 6in tall - will spend the 2024-25 campaign on loan at Bramall Lane, although the Blades are not believed to have an option to make the deal permanent.
"I knew that it might be on for a couple of weeks, but over the weekend I was waiting on the phone call telling me to come up to Sheffield. I can't wait to get started," Souttar told the official Sheffield United website.
"The club speaks for itself. I don't need to tell anyone how big the club is. As soon as I found out I was available and the club was looking at me, it was a no brainer to come here."
Souttar remains under contract with Leicester until 2028 but has played just 16 games for the Foxes since his January 2023 arrival from Stoke City, who received €17m (£14.6m) for his sale.
Alexis Sanchez on verge of return to former club?
At the other end of the pitch, veteran Chile attacker Alexis Sanchez is reportedly weighing up an offer to return to one of his former clubs.
The erstwhile Arsenal, Barcelona and Manchester United man became a free agent in July when his one-year contract with Italian champions Inter Milan expired.
While Sanchez is now in the twilight of his career, he seemingly has no intention of hanging up his boots, as The Athletic reports that he has been offered the chance to return to Udinese.
Le Zebrette were the first European side that the 35-year-old represented, joining from boyhood club Cobreloa in 2006 and staying for five seasons before a big-money move to Barcelona.
The report adds that the contract details have not been finalised, but there is a yearning on both sides to strike an agreement, which would see Sanchez return to the club he registered 21 goals and 20 assists in 112 matches for.
Sanchez represented Chile at this summer's Copa America, but his nation crashed out in the group stage without scoring a single goal.
Ex-Arsenal goalkeeper wanted by Championship outfit?
Onto another ex-Arsenal man - albeit one who left one year before Sanchez arrived at the Emirates - veteran goalkeeper Vito Mannone is supposedly wanted by Championship side Hull City.
The 36-year-old has been hopping across France over the past four years, representing Monaco, Lorient and now Lille, where he plays second fiddle to Lucas Chevalier.
Mannone's contract with the 2020-21 French champions runs out at the end of the season, though, and according to The Sun, Hull are keen on a reunion with the Italian.
While on the books at Arsenal, Mannone represented the Tigers on loan in the 2010-11 season and in the second half of the 2011-12 campaign, keeping 14 clean sheets in 33 appearances.
Due to his age and contract situation, Hull would realistically only need to pay a nominal fee to bring Mannone back to England, but the report adds that they are yet to reach an agreement with Lille.
The former Italy youth international made 23 appearances for Arsenal between 2005 and 2013, while he has also represented Sunderland and Reading in English football.
Arsenal youngster wanted by Belgian duo?
From two former Arsenal men to a current Gunners youngster, and 21-year-old striker Nathan Butler-Oyedeji is supposedly wanted by a pair of Belgian clubs.
The 21-year-old has been on the books in North London since 2011 but is yet to make the grade at Arsenal, whom he is yet to earn his first-team debut for.
Butler-Oyedeji endured a failed loan spell at Cheltenham Town in the first half of last season, where he failed to score or assist in 14 matches, before netting six goals in as many games for Arsenal's Under-21s.
Now, Football Insider claims that the Gunners are happy to let the 2003-born attacker leave this summer, as he is not in Mikel Arteta's plans moving forward.
Standard Liege and Eupen are reportedly interested in signing Butler-Oyedeji, who made the bench once in the Premier League and once in the FA Cup in the 2022-23 season.
The striker also represented Accrington Stanley in the second half of that campaign, but again, he failed to bag a goal or assist in that temporary spell.