Williams has enjoyed a breakthrough season at United, making a total of 33 appearances at left-back.
The 19-year-old, who is one of 12 academy products to have played for the first-team this season, is set to be first-choice for the rest of the campaign after Luke Shaw was ruled out with an ankle injury.
'Signing this contract is another really proud moment for myself and my family,' said Williams.
'Having been at Manchester United since I was seven years old, it's genuinely a dream come true to be playing in the first team.
'It has taken a huge amount of hard work to reach this point and it has been really special for me to break through into the squad. I've learned a lot throughout the season from the manager, his coaching staff and my team-mates and I want to repay the trust that they have all shown in me.
'I know that everyone at the club is working really hard every day to achieve success in the coming years and I am really excited to be a part of that.'
Manager Ole Gunnar Solskjaer paid tribute to the England Under-20 international, saying: 'Brandon has had an excellent first season, so we are delighted that he has signed a new contract.
'This new deal is a real testament to his hard work and the progress that he has made since his debut.
'Brandon never looked back after stepping up from the academy and having come all the way through the system he understands what it means to play for Manchester United.
'He has all of the attributes required to be a member of this exciting young squad. He will continue to learn every day in training and we look forward to watching him develop over the coming seasons.'
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