The England U19 international will replace Aaron McCarey, who has been recalled by Wolves, in the Saddlers' squad and could make his debut against Hartlepool in Saturday's League One game.
United have high hopes for Johnstone, who has impressed for their U21 side this season, but following Ben Amos' recall from Hull City the 19-year-old is set for a spell away to gain more experience.
Johnstone has already had temporary spells with Oldham and Scunthorpe and made 13 appearances for the latter last season.
Walsall boss Dean Smith told the club's official website: "It was unfortunate that Aaron was recalled, but he will be replaced by a very able lad in Sam Johnstone.
"I know that Manchester United have high aspirations for him and he has already had a couple of previous loan spells at this level, so he knows what it's all about.
"I know a lot about the lad and watched him in action recently. I've had some very positive reports on him and am delighted to be able to bring him on board until the end of the season."
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