The Portuguese replaces Louis Van Gaal who was sacked by the English club on Monday, two days after United won the FA Cup.
Negotiations began on Tuesday and were delayed over the 53-year-olds image rights from former club Chelsea, however was finalised on Thursday evening.
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“Jose is quite simply the best manager in the game today,” said United executive vice-chairman Ed Woodward.
Mourinho has a 66-percent win rate in the English Premier League the best of any manager in history.
Upon winning three Premier League trophies, the Portuguese has led Real Madrid to the Spanish title in 2012, and guided Porto and Inter Milan to Champions League victories in 2004 and 2010 respectively.
“His track record of success is ideal to take the club forward,” Woodward continued.
“He has won trophies and inspired players in countries across Europe and, of course, he knows the Premier League very well, having won three titles here.”
He becomes the 24th full time manager to manage the Old Trafford club and the third after Sir Alex Ferguson.
“To become Manchester United manager is a special honour in the game. It is a club known and admired throughout the world,” Mourinho said.
He said he had always “felt an affinity with Old Trafford” and claimed he has “always enjoyed a rapport with the United fans”.
“I’m looking forward to being their manager and enjoying their magnificent support in the coming years.
He added: “There is a mystique and a romance about it which no other club can match.”
Mourinho was sacked by Chelsea in December, seven months after winning the Premier League title, with the club, leaving the Blues 16th in the league, just one point above the relegation zone.