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Ifill, who made his Millwall debut during the 1998/99 season, has been a key figure at The Den over the past seven seasons, appearing in both the AWS Shield and FA Cup Finals. He was also one of the driving forces behind Millwall's Second Division Championship success in 2000/01.
Speaking of his signing, Blades manager Neil Warnock said: "He's a player who has been top of my wanted list for some time and I have wanted to sign him for years. My disappointment at losing at Wolves has been tempered by still being able to sign Lilian, Paul and a few others."
25 year old Ifill had a frustrating time with an ankle injury last season but managed to convince Warnock of his talents in the final few games of the campaign.