The defeat marked Manchester United's first in their last ten league games. The result was a surprise, as it came against a Sheffield side who scored only ten goals and garnered five points in the first half of the season.
The Red Devils controlled possession for large spells of the opening period without really threatened the Sheffield defence. Instead, Manchester United gave away possession too many times, allowing the visitors to break on the counter.
It was Sheffield who broke the deadlock in the 23rd minute of the game; they did so from a poorly-defended corner-kick.
Manchester United took forty minutes to conjure their equaliser courtesy Harry Maguire. However, only ten minutes later, shambolic defending saw Sheffield reclaim the lead which they didn't relinquish.
The result - Sheffield's first league win at Old Trafford in almost five decades - had no ramifications in the league table.
Manchester United remain second, a point behind league leaders Manchester City, who have a game in hand. Sheffield, on the other hand, are firmly rooted at the bottom of the league table despite taking the three points.
On that note, let us have a look at the player ratings of both teams.
Manchester United Player Ratings
David De Gea - 4/10
The Manchester United goalkeeper found himself caught in no-man's-land for the first goal of the game; he came out of his line to deal with a cross from a corner but completely fumbled it.
David de Gea might have saved the second goal had it not been deflected into his net by a Manchester United defender. The custodian made only one save all game.
Aaron Wan-Bissaka - 5.5/10
The Manchester United full-back had the most touches in the first half, as Manchester United looked to build-up play from the flanks.
Aaron Wan-Bissaka was lively going forward, creating three chances, but didn't offer much else in attack.
Axel Tuanzebe - 3/10
It was a horror show from the Manchester United academy graduate Axel Tuanzebe, as he was directly at fault for both goals conceded.
He conceded the corner kick that led to Sheffield's first goal, while the second came when he deflected Oliver Burles' tame shot into his own net.
A surprise name in the Manchester United starting XI, the 23-year-old did absolutely nothing to prove his worth to Ole Gunnar Solskjaer.
Tuanzebe was also booked at the end of the first half after hacking down Billy Sharp at the edge of the box before he was hooked off in the 83rd minute.
Harry Maguire - 6/10
The Manchester United captain Harry Maguire put in a decent shift all around the park, pinging long balls down the flanks.
He got the equaliser for Manchester United but failed to clear the ball in the buildup to Sheffield United's second goal.
Alex Telles - 5.5/10
Alex Telles was the quietest player in the Manchester United backline in the first half. He grew into the game as the game wore on, getting the assist for Manchester United's equaliser, after a well-taken corner kick.
However, he offered little defensively before he was replaced by Luke Shaw in the closing moments of the game.
Nemanja Matic - 5/10
Nemanja Matic had the second-most tackles for Manchester United, keeping play ticking in his usual fashion. However, he offered nothing in attack, though.
Paul Pogba - 5.5/10
The in-form Paul Pogba dazzled in the middle of the park for Manchester United. The Frenchman completed the joint-most take on while playing some deft passes around the pitch. He worked tirelessly and was unlucky to be on the losing side.
Bruno Fernandes - 5.5/10
Bruno Fernandes created the most chances on the pitch for Manchester United. He gifted Mason Greenwood a glorious chance to level the scores, with a brilliant through ball. However, the opportunity went wastefully begging.
Marcus Rashford - 5/10
The Manchester United forward took on opposition defenders. Marcus Rashford completed all five take-ons he attempted and was particularly lively in the first half but faded as the match wore on.
Mason Greenwood - 4.5/10
Mason Greenwood squandered Manchester Unites's best chance of the game when he was played through on goal to level the scores at 1-1. He was eventually replaced by Edinson Cavani in the 66th minute.
Anthony Martial - 3/10
The Manchester United forward continued his abysmal form this season with a lacklustre performance in and around the opposition box. Anthony Martial created absolutely nothing and had just one shot all game.
Player ratings of Manchester United Substitutes
Edinson Cavani - 4/10
The veteran striker Edinson Cavani came on for the final 25 minutes of the game. But he had almost no impact, as Sheffield United did a very good job defensively to see out the win.
Luke Shaw - 5/10
Luke Shaw played only eight minutes but was extremely electric down the left, sending in six crosses and completing three of them. He also created one chance but had nothing to do defensively all game.
Donny van de Beek - 4/10
The Dutchman Donny van de Beek came in late but had little to do.