The 41-year-old departs Rangers after three-and-a-half seasons where he won the club's first top-flight league title since 2011 and guided the team into four consecutive Europa League group stages.
Gerrard quickly emerged as the No1 candidate for Villa following the sacking of Dean Smith and he was won over by the vision of owners Nassef Sawiris and Wes Edens.
“Aston Villa is a club with a rich history and tradition in English football and I am immensely proud to become its new head coach,” he said.
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“In my conversations with Nassef, Wes and the rest of the board, it was apparent how ambitious their plans are for the club and I am looking forward to helping them achieve their aims.
“I would like to express my sincere gratitude to everybody associated with Glasgow Rangers for giving me the opportunity to manage such an iconic football club. Helping them secure a record-breaking 55th league title will always hold a special place in my heart. I would like to wish the players, staff and supporters the very best for the future.”
Villa find themselves embroiled in a relegation battle, sitting just two places and two points above the drop zone.
The club's chief executive Christian Purslow worked with Gerrard at Liverpool.
"The board of Aston Villa are delighted to appoint Steven as our new head coach,” he said.
“Since moving into coaching after his illustrious playing career, Steven began by managing and developing top young players in the Liverpool FC Academy which is experience we value highly at Aston Villa.
“He then took the brave decision to test himself in the intense and high pressured environment of the Scottish old firm. His subsequent achievement in winning the Premiership title with Glasgow Rangers really caught our eye as did his experience in Europe.
“It has been very clear in our discussions with him that Steven’s coaching ambitions, philosophy and values entirely match those of Aston Villa.
“We are excited he has agreed to lead us in the next phase of our ambitious plans.”