The France international, who had recently entered the final year of his existing deal, becomes the third player after Tyrone Mings and Boubacar Kamara to agree fresh terms this summer.
Villa are prepared to offer Morgan Rogers a new deal just nine months after he signed his last one, while there is a chance Jacob Ramsey could also agree an extension should he remain at the club beyond the end of the transfer window.
At 32, Digne is the second oldest outfield player on Villa’s books behind Mings but both remain a key part of Unai Emery’s plans.
Digne’s future was under the spotlight earlier in the summer when it emerged Atletico Madrid had placed him on their list of transfer targets.
But the preference of both the player and Villa was for him to stay and talks have progressed smoothly over recent weeks.
Digne, who has recently broken back into the France squad and is aiming to play at next summer’s World Cup, has made 139 appearances in all competitions since joining from Everton for £25million in January, 2022.