The two Premier League clubs issued a joint statement on Monday announcing that Ashworth had been released from his contract at St James’ Park.
The 53-year-old was placed on gardening leave by Newcastle earlier this year after expressing a desire to move to Old Trafford.
No compensation details have been disclosed but it is understood Ashworth will be able to begin his new role at Old Trafford with immediate effect.
The statement read: “Newcastle United and Manchester United have reached an agreement for the immediate release of Dan Ashworth from his contractual obligations at Newcastle United.
“The terms of this agreement remain confidential between the clubs. Newcastle United thanks Dan for his services and wishes him well for the future.”
United’s interest in Ashworth became apparent after Jim Ratcliffe’s INEOS company completed the purchase of a minority stake in the club and subsequently took over the running of football operations.
There were reports Newcastle were seeking £20 million ($25 million) compensation to release Ashworth, a figure Ratcliffe described as “a bit silly”, but a compromise has now been reached.
Ashworth, previously technical director at the Football Association, is the latest arrival at United, who have overhauled their backroom staff.
Omar Berrada is joining from Manchester City as chief executive and Jason Wilcox, previously at Southampton, is the new technical director.
Speaking earlier this year when a deal for Ashworth was still to be struck, Ratcliffe said: “I think Dan Ashworth is clearly one of the top sporting directors in the world. I’ve no doubt he’s a very, very capable person.
“And he’s interested in the Manchester United job because it’s probably the biggest sporting director job in the world just now, with the biggest challenge.”
A disappointing campaign last season ended with United winning the FA Cup by beating Manchester City in the final.
Manager Erik ten Hag came under huge pressure during the season but the Dutchman is to remain at the club, preparing for a third season in charge.
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