The 36-year-old defender, whose contract at Stamford Bridge expired on 30 June, has signed a one-year deal with the Championship club.
Terry said he turned down offers to carry on playing in the Premier League for more money because he did not want to play against Chelsea.
He won 78 caps for England, played 717 games for the Blues and won his fifth Premier League title in May.
Villa finished 13th in the Championship last season but Steve Bruce’s side are among the favourites to win automatic promotion to the top flight in 2017-18.
Birmingham City manager Harry Redknapp said in June that his club had made an offer to Terry, who announced in April that he would be leaving Chelsea.
Terry has played for only two other English clubs – Chelsea and Nottingham Forest, with whom he had a short loan spell in 2000.
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