The 24-year-old defender watched Albion's 2-0 win at Leeds on Tuesday night before completing a medical and signing on Wednesday.
He had fallen out of favour at Villa Park and Brighton were in need of reinforcements after missing out on Stephen Ward last week.
Ward was poised to join Albion after they agreed a fee with Wolves, following his successful loan at The Amex last season, before Burnley hijacked the move.
"I'm delighted we have agreed with Joe and Aston Villa to bring him here on a season-long loan," Seagulls boss Sami Hyypia told Brighton's official website.
"He is a dynamic left-back who's very comfortable on the ball. He's very mobile and will suit the way we want to play.
"He is a good footballer who knows how to use the ball and I hope he will be a very good player for us.
"At 24 he has a good deal of experience, both in the Championship with Middlesbrough and in the Premier League with Aston Villa, and that too is key."
Bennett signed for Villa from Middlesbrough for £2.75million two years ago but has struggled in the Barclays Premier League, despite making 30 top-flight appearances.
He lost his place to Antonio Luna last season before the pair were axed when Ryan Bertrand was brought in on loan in January.
Luna joined Verona on loan last month before Aly Cissokho arrived from Valencia for £4.5m and the France international is expected to be Paul Lambert's first-choice left back.
Lambert is clearing out his squad and Bennett's exit is the fifth season-long loan to come from Villa Park this summer after Luna, Nicklas Helenius, Yacouba Sylla and Aleksandar Tonev all left.
Bennett could make his Brighton debut in their home game with Bolton on Saturday.