The Whites have been linked with the Stoke keeper during the past week and a deal has now been agreed for the England international to move to Elland Road.
Butland was on loan at Barnsley earlier this season, but he will now link up with Brian McDermott's side with Paddy Kenny reportedly struggling with injury.
United have only had one experienced keeper available this season, with Jamie Ashdown out injured. Alex Cairns has fitted in on the bench but Butland now provides adequate cover and a serious challenger for Kenny's first-team jersey.
The 20-year-old could go into Leeds' first-team for the game against Middlesbrough on Saturday but that appears to depend on Kenny's injury.
Butland is currently the third choice keeper at Stoke, with Asmir Begovic and Thomas Soensen in front of him but he has plenty of potential and will add some real quality to the squad.
Leeds have also been linked with Spurs keeper Heurelho Gomes this week but Butland's deal will now end that speculation.