The 21-year-old made his debut for the Old Trafford side in 2008 but over the last 18 months has found himself playing a much greater role in the first-team. He made his senior England debut in March 2011 and went to the European Championship this summer and - although United signed Robin van Persie for ?24million earlier this month - there was never any doubt Welbeck would sign a new deal.
"Danny has been with the club since he was eight years old and has made fantastic progress in the last couple of years - first out on loan and last year as a regular in the first team," manager Sir Alex Ferguson told manutd.com.
"He has become an important player at international level as well, as the maturity of his performances at the European Championship showed.
"This year is another important one for him. He has a bright future ahead of him."
Welbeck, born locally in Longsight, expressed his delight at signing a new deal with his boyhood club.
"Playing for United is all I've ever wanted to do - it's the club I've supported all my life," he said. "I can't wait for the challenge of the new season to play my part in helping the team compete for trophies.
"I'm learning all the time from the best manager in the game and I'm keen for that to continue alongside the world class players in the squad."
Welbeck has scored 17 goals in 64 appearances for United since his first appearance against Middlesbrough in the League Cup in September 2008.