The 24-year-old goalkeeper spent last season on loan at Malaga but found starts hard to come by under Manuel Pellegrini.
And with Thibaut Courtois returning to Atletico from Chelsea for another campaign, newly-promoted Villarreal moved quickly to acquire his services, initially for 2013-14 but with a view to a permanent deal.
The former Spain Under-21 goalkeeper will provide competition for the number one spot for Juan Carlos Sanchez.
A statement on the club's official site read: "Villarreal, subject to the signing of the contract, have reached an agreement with Atletico Madrid for goalkeeper Sergio Asenjo, who will play on loan for the 2013-14 season at the Yellow Submarine.
"Also, Villarreal, have the option to buy the goalkeeper at the end of the loan period."
