As reported by Get Football News France, United are close to agreeing a fee of £51million (€60million for Ugarte).
Ugarte impressed at the start of last season for PSG but lost his place in the side and was deemed to be ill suited for Luis Enrique's style of play.
PSG boss Enrique was reportedly concerned about Ugarte's weaknesses in possession.
Manchester United are on the verge of signing Paris Saint-Germain midfielder Manuel Ugarte
However, United boss Erik ten Hag believes that the 23-year-old can make a big impact at Old Trafford.
Despite his difficulties at PSG, Ugarte still made 37 appearances last season as Enrique's side won the domestic treble of Ligue 1, the Coupe de France and the Trophee des Champions.
He was left out of the squad for PSG's Ligue 1 opener against Le Havre.
Ugarte has been capped by Uruguay on 22 occasions, having made his debut in 2021.
United have been heavily active in the transfer market so far this summer as ten Hag's side look to improve after finishing eighth in the Premier League last season.
Forward Joshua Zirkzee joined from Bologna and scored a late winner on his debut against Fulham.
Defender Leny Yoro, meanwhile, joined from Lille for £52million but suffered a fractured metatarsal in pre-season.
United have also brought in defenders Matthijs de Ligt and Noussair Mazraoui from Bayern Munich.