The 27-year-old France international was signed from Southampton for 25 million pounds in 2015, but became a peripheral figure under United manager Jose Mourinho, making only eight appearances this season.
He said in a club statement that he was relishing the prospect of being reunited with Everton manager Ronald Koeman, with whom he worked for one season at Southampton.
“There is a manager in place here that I know, I know he can get the best out of me, I know his style and how he likes to play football. He was very good with me from the start and I enjoyed playing football under him," Schneiderlin said.
“He was very good for me and, obviously, he was a massive player in his playing days and you can only learn from the best. At Southampton he gave me some great advice to keep improving every day and it was a pleasure to work with him."
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Everton said the midfielder had signed a four-and-a-half-year deal for an initial 20 million pounds fee, which could rise to 24 million.
The move comes days after Koeman urged the Everton board to back him in the transfer market after Saturday's FA Cup exit at home to Leicester City.
Everton let slip a one-goal lead at Goodison Park with Nigerian striker Ahmed Musa's second-half double enough to condemn the Merseyside club to a 2-1 third round defeat and the likelihood of another season without silverware.
“I’m very pleased because I know the player, I know the qualities of the player, I know him as a person and he’s really desperate to come to Everton -- and that’s what we need,” Koeman said.
Schneiderlin's move has enabled fellow midfielder Tom Cleverley to join Watford on loan with a view to a permanent transfer.
Everton said the 27-year-old, who moved to Goodison Park from Manchester United in July 2015, had joined their Premier League rivals for the rest of the season with an option for Watford to buy.
($1 = 0.8195 pounds)
(Reporting by Toby Davis and Neville Dalton; editing by Pritha Sarkar)
