Williams moves to the Bairns on a season-long loan.
The midfielder, before signing with Falkirk, inked a new contract with United to 2028 with an option for another year.
Last season, Williams did well on-loan with Cheltenham Town in League Two, scoring his first goals in senior football.
Falkirk Manager John McGlynn said on bringing Ethan to The Falkirk Stadium: “We’re absolutely delighted to bring Ethan Williams to Falkirk.
"He’s a young player of real quality who has been developed in one of the best academies in the world at Manchester United, and he now has the chance to take the next step in his career with us. Ethan is quick, direct, and has an eye for goal, qualities that we feel will add a different dimension to our attacking play and excite the supporters.
“Ethan is a player we’ve had our eye on for some time, we were chasing this deal before the window even opened. It’s been a long road getting him to Falkirk with plenty of twists and turns along the way, but we always felt it was worth persevering with and we’re delighted to finally get it over the line.
“Whenever you recruit from a club of Manchester United’s stature it requires a lot of cooperation, so I’d like to place on record my thanks to Nick Cox, Jonny Evans, and Chris Chiang for the part they played in making this move possible.
“I’d also like to give a special mention to our Chief Scout, Allan Fraser. Allan has worked tirelessly on this deal, identifying Ethan early, keeping in close contact with the right people, and ensuring we were in a strong position when the opportunity arose. His hard work has paid off and we’re very grateful for it.
“We’re looking forward to working with Ethan now. This is a great environment for him to learn, develop, and show his ability, and we believe Falkirk is the perfect place for him to take his game to the next level.”