The former Reds midfielder takes over from Dean Smith, who was sacked last weekend following a run of five straight Premier League defeats.
Gerrard, 41, joins the Villans after three years in charge at Rangers, where he delivered a first Scottish Premiership title for 10 years after going undefeated last season.
Gerrard said: “Aston Villa is a club with a rich history and tradition in English football and I am immensely proud to become its new head coach.
“In my conversations with Nassef [Sawiris], Wes [Edens] and the rest of the board, it was apparent how ambitious their plans are for the club and I am looking forward to helping them achieve their aims.
“I would like to express my sincere gratitude to everybody associated with Rangers for giving me the opportunity to manage such an iconic football club.
“Helping them secure a record-breaking 55th league title will always hold a special place in my heart.
“I would like to wish the players, staff and supporters the very best for the future.”
The ambitious Midlands outfit have secured what was believed to be their first choice as they bid to improve on their current position of 16th in the table.
Gerrard was known as one of the Premier League’s best players during a 17-year career with Liverpool and is relishing the prospect of managing in the English top flight.
The former midfielder is joining a club he enjoyed success against over the years — the 12 goals he scored in games with Villa is the most he had versus a team in the Premier League.
He played 710 times for Liverpool, winning nine trophies incluing a memorable Champions League triumph in 2005.
Gerrard took his first steps in management at the Glasgow club in 2018, where he became a popular figure after bridging the gap that had formed behind rivals Celtic.
He leaves Rangers four points clear at the top of the Scottish Premiership.
After announcing his departure, Rangers chairman Douglas Park said: “I would firstly like to put on record my thanks to Steven for his outstanding efforts over the last three-and-a-half years at Rangers.
“He has provided us all with some unforgettable moments, not least his delivery of the Scottish Premiership title back to Ibrox last season having not lost a match in the entire league campaign.
“In European competition, he has restored the good name and credibility of our club on the continent and leaves us in a very healthy position on the pitch.”
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