Neilson was reluctant to sell Baldock, but Blades offer was too good to refuse
Baldock departs for Bramall Lane after 14 years at the club and turning pro back in 2009, making 125 appearances and scoring twice.
The money raised from the sale will go into manager Robbie Neilson's coffers to strengthen his threadbare squad this summer, with a similar stance taken when they sold Samir Carruthers to the Blades back in January.
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Hide AdNeilson said: “We’re disappointed to lose George because he’s a talented player. He wanted to test himself in the Championship next season, though, and we wish him all the best.
“The deal is a good one for the football club and it will allow us to reinvest in the squad as we aim to challenge at the right end of the table in 2017/18."
Baldock is the second of his name to leave MK Dons for a significant gain, after brother Sam was sold to West Ham in 2011. Chairman Pete Winkelman paid tribute to the younger Baldock brother and thanked him for his years of service to the club.
He added: “After 14 years of superb service to the football club, we are sad to see George leave, however we are conscious of his desire to play Championship football.
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Hide Ad“He is one of an ever-growing list of players that have developed within our fantastic Academy and I’m sure I speak on behalf of everyone associated with MK Dons when I wish George every success in the future.”