The 21-year-old striker, who started for the Red Devils in their 1-0 defeat to Everton on Monday, has raised doubts over his future at Old Trafford following reports of a contract dispute.
Despite speculation over a possible exit, the frontman has committed his future to the North-West club five days after the club's acquisition of Robin van Persie.
"Playing for United is all I've ever wanted to do," Welbeck told the club's official website. "It's the club I've supported all my life.
"I can't wait for the challenge of the new season to play my part in helping the team compete for trophies. I'm learning all the time from the best manager in the game and I'm keen for that to continue alongside the world class players in the squad."
United boss Sir Alex Ferguson added: "Danny has been with the club since he was eight years old and has made fantastic progress in the last couple of years. This year is another important one for him. He has a bright future ahead of him."
Welbeck is likely to feature for the Red Devils this Saturday when they take on Fulham in the Premier League.