The Irish center back has penned an improved contract that will run until the summer of 2024.
The Republic of Ireland international, who featured 42 times for club and country last season, has signed a new four-year-deal after an impressive first season in the Premier League.
Egan said: "The last two years have probably been the most successful of my career and to get the chance to sign a new contract here is brilliant for me and I'm really looking forward to the future. I need to thank everyone involved.
"I've loved my time here. We won promotion in the first year and had a real good first season back in the Premier League, so now it is about building on that and improving in the future."
Signed from Brentford in the summer of 2018 for a then record fee, the 27-year-old has been instrumental to United's continued success, helping the Blades win promotion from the Championship in his first full season as a Blade, before playing a key role in helping the club secure a ninth place finish in the top-flight.
Boss Chris Wilder added: "It's a reward for the influence John has on the team and at the football club. He's been part and parcel of our climb over the last two years and he's taken his game to the next level.
"He's a rock-solid character who produces performances week in, week out against world-class players and on the international stage I know how much he loves playing for his country and he'll take his career on to the next step there as well.
"We've got to reward and secure our best players and John is certainly one of those, we have to thank the Board for their support in allowing us to put this deal together.
"John has been outstanding and knowing the boy as we do, we know John is not a comfortable footballer, he wants to establish himself and continue to improve at the highest level."
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