The Greece international became the fifth new player to arrive at Bramall Lane before the transfer window closed, joining Sander Berge, Richairo Zivkovic, Jack Robinson and Jack Rodwell in South Yorkshire.
Chris Wilder, the United manager, said: “Panos is another one who comes to us with a great pedigree and hopefully we can help progress his career.
“He is young, talented and one that we’ve had our eye on for quite a while.”
“He’s an international who has played at the top level and cost a lot of money when moving across Europe.”
“Now he wants to prove himself in the Premier League and this initial loan spell is the perfect opportunity for Panos to have a look at us and for us to have a good look at him,” Wilder added, suggesting Retsos’ stay could yet extend into next term.
“The Premier League is, for me, the best league in the world,” Retsos said. “It is an honour for me to represent a historic club like Sheffield United.
“It is a very good opportunity for me to play. I really admire the players here and I am looking forward to learning from them and playing together.”
Retsos, aged 21, cost Leverkusen nearly £16m when he left Olympiacos in 2017. Although injuries initially stalled his progress at the Bundesliga club, the defender has been described as a “special talent” by their sporting director Rudi Voller.
Like Berge and Zivkovic, Retsos boasts European experience and started the German’s Champions League tie against Lokomotiv Moscow earlier this term.
“Panos lost an entire year due to injuries,” Voller said. “And it is now important for him to play football.
“Going to Sheffield United offers him the highest level (of competition) to get himself back into top shape.”