The winger-turned-full-back has chosen to return to the club where he spent four years after joining from Watford in a £10million deal in 2007.
It is understood Young, a free agent having come to the end of his contract with Inter Milan, chose Villa after they came in with an offer following the 35-year-old’s talks with Watford and Burnley.
Young decided against extending his stay in Italy, having turned down a new deal at Inter.
Villa see him as an experienced campaigner who can play a number of roles, including as cover for full-backs Matt Targett and Matty Cash this season.
Meanwhile, Arsenal are reported to be keen to see off Villa interest in midfielder Emile Smith Rowe following a £25m bid for the attacking midfielder.
It was reported that the Gunners – who lost out to Villa in the £38million signing of Emi Buendia from Norwich – are keen to tie down Smith-Rowe on a long-term contract.
The 20-year-old played 33 times in all competitions for Arsenal last season, scoring four goals.