The 25-year-old had been linked with a move away from his boyhood club this summer, with Manchester United most heavily credited with an interest in his signature.
However, the captain has now put pen to paper on a new long-term contract which will keep him at Villa Park until 2025.
"I am delighted to make this commitment to Villa. It is my club, my home and I am very happy here," Grealish told the club's official website.
"The owners have made it very clear to me how ambitious they are and how they want to build Aston Villa. There are exciting times ahead and I am very glad to be part of it."
Villa CEO Christian Purslow added: "Jack is an emblem of our owner's vision for Aston Villa. He joined our club as a local boy aged six and has developed into one of the country's finest players finally becoming a full England international last week.
"We are determined to build a top team around him and are delighted that he is extending his contract and committing himself to the club he loves."
Grealish has been with Villa since he was six years old and has gone on to make 186 appearances for the senior team, scoring 25 goals.
The midfielder was instrumental in keeping Villa in the Premier League last season and was rewarded for his performances with a maiden England cap earlier this month.