After making the decision to end his long-term association with Chelsea, the 36-year-old was linked with numerous clubs both home and abroad and at one stage, it appeared likely that he would join Bournemouth.
However, Terry has instead decided to drop down to the Championship to try to help the West Midlands outfit earn a return to the Premier League.
He told the club’s official website: “I am delighted to join Aston Villa. It’s a club I have admired from afar for many years – there are fantastic facilities at Bodymoor Heath, Villa Park is one of the finest stadiums in the country and there’s a good group of players here, with an experienced and successful manager in Steve Bruce.
“I can’t wait to get started now and look to help the squad achieve something special this season.”
Birmingham City had also been keen on signing the centre-back, but Villa have gotten one over their city rivals ahead of the new campaign.