Aberdeen were also interested in the Ireland Under-21 defender - and another option was staying in England with League One outfit Scunthorpe.
Gunning, who hopes to make his home debut against Dunfermline on Saturday, said: "The move took a bit longer than I expected because I had a few things to sort out at Blackburn, but I'm delighted it has all been finalised now.
"I had a few other options in England and up here in Scotland.
"After speaking to the manager he sold me on Dundee United.
"I knew about the club from playing against them last season but I spoke to Peter Houston on the phone and was really impressed by what he had to say.
"This is a good club - the team have been improving steadily the last few years, so it's an exciting place to be.
"I loved playing in the SPL last season and it's good I have experience of the league already, so I know what to expect."