"I'd been at United from the age of seven and I love the club - it was always my dream to play for United - but there comes a time when you have to be realistic.
"I want to make a career for myself; I don't want to be constantly going out on loan. I want to settle down at a club."
Meanwhile, Huddersfield Town manager Simon Grayson said he was delighted to have secured Norwood's signature.
"He's a brilliant footballer and someone I believe will do well for the football club. He's an excellent passer of the ball from the centre of the park and shows good composure on it.
"Oliver turned down a number of other clubs to be a part of our team... Manchester United offered him a new deal, but he wanted to leave to pursue his career, which says a lot about him."
More: Latest transfer rumours