Nicky Butt's academy side were made to work hard by a dogged performance from their Airtricity First Division opponents at the RSC
Waterford fielded an under-strength starting XI, including two trialists, as their attentions are focused on domestic action, while the capacity crowd at the RSC got to see some of United's academy stars in action.
Manchester United's youngsters enjoyed most of the possession in the early stages, but found it difficult to break down the Blues backline, with Waterford keeping men behind the ball. Belgian midfielder Andreas Pereira drew a fine save from Chip Sanders with a curled effort as United looked for openings with slick passing.
A free-kick in a dangerous position saw the Blues get their first sight of Pierluigi Gollini's goal, but Ben Ryan's free-kick went narrowly over. At the other end, James Wilson went closer with a lofted effort, but saw his shot come back off the crossbar before Sanders denied him the chance to slot home the rebound.
The visitors took a deserved lead on 35 minutes when Wilson curled the ball past Sanders after a good period of possession. Waterford carved out an excellent opportunity to go level just before half-time, but Gollini did well to force Conor Coad's shot over the crossbar.
United added to their tally six minutes into the second-half when England under-19 striker Jack Barmby dribbled past three players in the box before putting the ball past substitute goalkeeper Craig Hyland. Both teams used their full array of subsitutes in the second-half, with Republic of Ireland underage international Sam Byrne getting a warm reception from the home fans.
Waterford were equal to their opponents for large parts of the second period, and pulled one back when right-back Conor Whittle blasted the ball past Jonny Sutherland to get the hosts back into the tie on 73 minutes.
Sutherland pulled off a great save to deny Periera after a fantastic run from former Manchester City youth Fisayo Adarabioyo Olatayo, while Peter Higgins missed an open goal from 10 yards out at the other end in an entertaining finale.
Waterford United will return their attentions to League of Ireland action as the face rivals Wexford Youths on Friday, July 19, while Butt's Red Devils will return to England to face Ross County in a pre-season friendly the following day.