The 36-year-old, who made 717 appearances for the Stamford Bridge club, was available on a free transfer after bringing curtain down on his glittering career at the Bridge at the end of 2016/2017 season.
Birmingham City, Bournemouth, Brighton, West Brom and Swansea were all linked with the former England captain, but Villa finally clinched the player's signature after Terry apparently held discussions with manager Steve Bruce during a golf trip to the Algarve.
Villa will hope Terry can inspire them to win promotion back to the Premier League under Bruce.
He signed a 12-month contract worth £60,000-a-week with the title favourites.
He arrives at Villa after winning the Champions League, the Europa League, five Premier Leagues, five FA Cups and three League Cups with Chelsea.
I love to see him lacing his boots against the Blues someday.