The midfielder arrived from Crewe last summer and quickly became an important part of Paul Lambert's plans, finishing his first season with 28 Premier League starts.
And Lambert is happy to reward his "exceptional" £2million signing with a new deal.
The Villa manager told the club website: "I think a lot gets overlooked with Ashley but he has just come in here and has taken to it no problem whatsoever.
"He was captain at Crewe and played a lot of games in men's football before he came here so he knew what it was about.
"If you look at the stats regarding his passing, they are terrific, something like a 91% success rate. He never seems to give the ball away. He's been exceptional."
Westwood said: "This time last year I was still on pre-season with Crewe and now I'm signing another contract at Villa, it's a fantastic feeling for me.
"I love being here and I'm delighted to be part of a great football club. You look at the players the manager has brought to the club and they're all young and hungry.
"I just want to be part of that and hopefully we're building something special here."