A beautifully flighted 20-yard free kick over Oxford's defensive wall by Tony McMahon in the 17th minute put the Blades ahead.
Dave Kitson's close-range effort on 68 minutes, after Nick Blackman headed back Ryan Flynn's deep free kick, confirmed their superiority.
And Blackman's brilliant turn and shot into the roof of the net three minutes from time sealed an emphatic victory.
Oxford felt the free kick awarded against Jake Wright, for the first goal, was a harsh decision by referee Carl Boyeson.
Tom Craddock forced Blades goalkeeper George Long into a strong save from his angled drive and loan-signing Justin Richards scooped a shot narrowly wide at the start of the second half.
But Danny Wilson's League One high-fliers carried greater menace up front, and Blackman almost hit a third with a 20-yard effort that deflected just past the far post.
Oxford keeper Ryan Clarke also made a superb double save from Blackman and Jamie Murphy.
The U's almost pulled one back through substitute Sean Rigg but his angled drive was superbly turned aside by Long.