"I have not always chosen him in the selection, and I think for him it's better to play at his age than sit on the bench or play in the second squad," United manager Louis van Gaal told reporters ahead of Saturday's Premier League game against Leicester City.
"In the short term, maybe it's not so good for Manchester United, but in the long term it's better. It is part of the development of a player," he added.
Wilson joins a Brighton team that are unbeaten in the Championship this season and lie second in the table, behind Hull City on goal difference.
"We have been keen to add a striker, and James has been our number one target for some time, so we are absolutely delighted to have completed the deal," Brighton manager Chris Hughton told the club's website.
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"He is an exciting young striker, and we hope that this move will prove to be very good for all parties involved.
"He is very highly thought of at Old Trafford and he has been in and around the first-team picture at Manchester United since Ryan Giggs gave him his debut the season before last.
"I now hope he will help us maintain our excellent start to the season, and bring additional goals to the squad."
Wilson is contracted to United until 2019.
(Reporting by Simon Jennings in Bengaluru. Editing by Patrick Johnston/Amlan Chakraborty)
