Manchester United received £750,000 plus add-ons for right-back Ethan Laird from Birmingham.
United have also inserted a sell-on percentage into Laird's contract.
Laird, 21, had spent the last two seasons on loan at Championship clubs Swansea, Bournemouth and Queens Park Rangers.
The academy graduate made his United debut against Astana in the Europa League group stage in November 2019 and his only other appearance was against AZ Alkmaar two weeks later.
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United sources described Laird as one of the best characters to have emerged from the academy in recent years.
Laird only had a year left on his contract and there was no clear pathway into the first-team squad. Diogo Dalot signed a new five-year contract in May and Aaron Wan-Bissaka was the favoured right-back towards the end of last season.
Rookie Marc Jurado was also drafted into the matchday squad for the Premier League win against Nottingham Forest in April.
Laird is the eighth United academy talent to join Birmingham on loan or permanently in the last 10 years. Jesse Lingard, Tom Thorpe, Tyler Blackett, Federico Macheda, Teden Mengi, Tahith Chong and Hannibal Mejbri were loaned to the Blues.
Chong joined Birmingham permanently for £500,000 last year.
