The central midfielder’s current deal expires on 30 June and Town has agreed a compensation package with United that will see Norwood join the Yorkshire side on 1 July.
The 21-year-old, who spent last season on loan at Scunthorpe United and Coventry City, joined United at the age of seven and progressed through the club’s Academy set-up before agreeing professional terms in July 2009.
Born in Burnley, Norwood never made a first-team appearance for United, but impressed on loan spells in the lower leagues. Most recently, he was a huge fans' favourite at Coventry City, despite the Midlanders suffering relegation from the Championship last term.
Norwood told Huddersfield Town's official website that leaving United was difficult, but the lure of regular first-team football was too big to turn down.