Under his guidance, the team picked up the affectionate nickname the Busby Babes, due to the youthfulness of many of the players he fielded. They won the league in both 1956 and 1957, and were runners-up to Aston Villa in the 1957 FA Cup Final. The young side was so successful that centre-forward Tommy Taylor and goalkeeper Harry Gregg were United's only major signings over a spell of four years.

Busby and his team began the 1957-58 season full of ambition for an assault on the Football League title, FA Cup and European Cup. On the way home from a European Cup tie against Red Star Belgrade on 6 February 1958, their plane crashed on the runway at Munich Airport. Seven players and three club officials were among the 23 people who were killed at the scene; Duncan Edwards died from his injuries two weeks later, while two other players were injured to such an extent that they never played football again. Busby suffered multiple injuries and twice received the Last Rites, but he recovered from his injuries and left hospital after two months.

After the crash, Busby built a new side around Munich survivors including Harry Gregg, Bobby Charlton and Bill Foulkes. He also brought in players from other clubs - these included David Herd, Albert Quixall and Denis Law. Northern Irish forward George Best was scouted for Man Utd by Bob Bishop and signed to the club's playing staff by chief scout Joe Armstrong.
In 1963, Busby had successfully rebuilt United as he guided them to a 3-1 victory over Leicester City in the FA Cup final. They were league champions in 1965 and again in 1967, with only a defeat on the final day of the 1967-68 season stopping them from recording a rare championship hat-trick.

The biggest success of his career came on 29 May 1968 when the team won the European Cup. He retired as manager a year later[12] but remained at the club as a director, handing over managerial duties to trainer and former player Wilf McGuinness. When McGuinness was sacked in December 1970, Busby briefly returned to his managerial duties, but there was never any question of him returning as manager on a permanent basis. He carried on as a club director for 11 more years, before being made president in 1982.

Busby was awarded the CBE in 1958 and was knighted following the European Cup victory in 1968, before being made a Knight Commander of St Gregory by the Pope in 1972.