
The agreement means that the threat of High Court action between West Ham and Tevez's representative Kia Joorabchian is over and Tevez can move to Old Trafford.
Tevez is expected to sign a two-year loan deal, which will coast United about 5 million pounds (10.1 million dollars) a year, while West Ham will receive a fee of 2 million pounds for Tevez's registration.
The 23-year-old has already passed a medical and trained with United on Friday morning.
"Carlos is looking forward to being a Manchester United player and his ambition is close to being achieved," Jorabchian said in a statement.
"We would like to thank Manchester United for all their patience and support throughout."
West Ham were fined 5.5 million pounds over the transfers of Tevez and his Argentina team-mate Javier Mascherano after they were found guilty of acting improperly and withholding vital documentation over the duo's ownership.
However, they avoided a points deduction and stayed up on the last day of the season at the expense of Sheffield United.
United launched an appeal against the decision but it was rejected and they were relegated to the Championship.
In a statement, West Ham said: "The settlement ends the current litigation taking place between the respective parties and provides for a 2 million-pound fee to be paid to West Ham.
"The agreement confirms that West Ham do have a valid player's contract with Carlos Tevez and hold the registration of the player. This will be released once the agreed fee has been paid to the club."
DPA