The 30-year-old striker - who joined the Red Devils from Chinese Super League team Shanghai Shenhua in January - was due to leave the club on May 31, but he will now remain in the Premier League until January 2021.
As reported by the BBC, there is no option in the deal for United to buy the player.
Boss Ole Gunnar Solskjaer commented: "It's been a dream for him and hopefully he can finish what he started and win a trophy with us.
"Shanghai Shenua have been great towards us, allowing him to play for his dream club."
The Premier League season is set to continue on June 17 after the campaign was suspended in March due to the coronavirus pandemic.
United - who are fifth, three points behind fourth-placed Chelsea - were hoping to keep Ighalo on board as they are also still in the FA Cup and Europa League.
The news comes after the former Watford man's agent Atta Aneke confirmed talks were underway to figure out an extension.
He recently said: "We are nearing an agreement with Manchester United on an extended loan.
"The agreement will mean that Ighalo will remain with them until January 2021."