Palace have agreed terms with the 18-year-old who will join up with his new side on 1 July when his contract with Derby County expires.
Ebiowei enjoyed a breakthrough campaign under United legend Wayne Rooney at Pride Park last season, making 16 appearances for the senior side.
United were eager to bring him to Old Trafford this summer but Palace have won the race for his signature.
And the youngster has passed on his thanks to Derby ahead of his move to south east London and is eager to make an instant impact at Palace next season.
‘I’d like to thank everyone at Derby County for their incredible support over the last year or so, and for giving me the opportunity to show what I can do on the field, and I’d also like to thank the fans for their encouragement especially given the circumstances of last season,’ Ebiowei told Palace’s website.
‘As everyone is aware the situation is very uncertain at Derby, so it was important for me to secure my long-term future.”
He added: ‘I’m incredibly excited about the prospect of joining Palace, as they have an incredible squad and huge potential. I very much hope to contribute positively to the team this season.’
Palace chairman Steve Parish meanwhile has hailed the signing of the ‘highly coveted’ Ebiowei and is confident the club can provide him with the platform to thrive.
‘I’m delighted that Malcolm has chosen Crystal Palace as the best place to continue his development, following his impressive breakthrough into senior football in recent months,’ Parish said.
‘He is a highly coveted young player, and we very much expect to provide a platform for him to flourish at the highest level.’
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