England Under-21 centre-back Smalling, who was playing for non-league Maidstone just 18 months ago, will remain at Craven Cottage until the end of the season before joining United in the summer.
Arsenal had appeared favourites to land the 20-year-old after manager Arsene Wenger expressed his admiration for the south Londoner. But United adversary Sir Alex Ferguson moved quickly to agree a fee with Fulham and agree personal terms with Smalling in the same day.
Ferguson may need defensive cover a touch more urgently after Rio Ferdinand was charged with violent conduct by the Football Association yesterday.
Ferdinand faces a three-match ban after appearing to elbow Hull’s Craig Fagan during United 4-0 win on Saturday – his comeback game following a three-month injury absence.
Arsenal will be looking to go back in front of United tonight when they visit Aston Villa, while Ferguson’s men attempt to overturn a first-leg deficit in the Carling Cup semi-final with Manchester City.