The 19-year-old has been linked with a move to title favourites Chelsea, despite having never started a Premier League match.
However, after just four substitute league appearances and one Capital One Cup start, Grealish has put pen to paper on the new four-year contract with the club he has supported all his life, and is understandably delighted.
"It's a dream come true to commit my future to my boyhood club," Grealish told the club's official website.
"I've grown up supporting the club - in fact, I've had a season ticket at Villa since I was four-years-old and came to every game - so this is a big thing for me and my family.
"All of my families are Villa fans and my dad has been there from the start, all through my career he's followed me and he hasn't missed a Villa game this season.
"This has always been a club that plays a big role in the community, it has a family feel to it and I'm proud to be part of that now. This feels like home to me."
Boss Paul Lambert also revealed his excitement at securing the services of the former Notts County loanee.
"There's always an excitement around a young player who comes through the Academy, but the thing is the potential we have signed in Jack Grealish is great for everyone connected with Villa," Lambert added.
"He has a long way to go in the game but the potential that's in him, we believe, means we could have a really good player in the years to come.