The 19-year-old is a Crewe Alexandra product and scored for them in their 2-0 win over Cheltenham in the 2012 League Two play-off final.
He then joined Manchester United that summer and made his Premier League debut for the Old Trafford side against Wigan last September, coming off the bench to score in a 4-0 win.
Wigan boss Owen Coyle said: "We're delighted to welcome Nick, and thank Manchester United for allowing a player whom they have invested a large sum of money in and has incredible talent, to join us for the season.
"We're all excited to be offering him the opportunity to play football at a high level and for him to continue his development here at the club."
Powell becomes Wigan's 11th signing of the summer transfer window.