The 20-year-old became the youngest ever player to turn out for the Blades when he made his league debut in 2011.
Two years later, he was selected in England's Under-20 squad for the World Cup and he has gone on to cement himself as a regular for the England Under-21s.
Despite his age, the youngster has already played 73 games for Sheffield United but has appeared just once since February, with Mark Howard preferred by boss Nigel Clough.
Oxford manager Michael Appleton told his club's official website: "George is very highly rated and has been part of the England set-up so we are very excited to have him here.
"He is tall, he communicates well and likes to command his box.
"We now have two good young keepers who will push each other all the way."