The 20-year-old Greenwich-born centre-back will join the Reds from the start of the 2010/11 season.
A club spokesperson told ManUtd.com: "Manchester United has agreed terms for the transfer of Chris Smalling from Fulham. Chris has agreed personal terms with the club and will join for the beginning of the 2010/2011 campaign. He will remain at Fulham until the end of the current season."
An England Under-21 international, Smalling has made just nine first-team appearances for Fulham, who signed him from non-league Maidstone 18 months ago.
After shining in the club’s Reserves, Roy Hodgson handed him his senior debut on the final day of the 2008/09 season. His first start came in September 2009 when Fulham travelled to CSKA Sofia in the UEFA Cup, where he played the full 90 minutes in a 1-1 draw. Hodgson said: “If you analysed his performance, he played with a maturity I'm not entitled to expect from a player so young.”