Villa, who is in camp with Spain ahead of the World Cup, will complete a loan stint in Melbourne before officially linking up with another City-owned club, New York City, in MLS in 2015.
The 32-year-old striker became the first player to sign with New York City on Monday, after announcing he was leaving Atletico Madrid the day earlier, and will head to Melbourne on a 10-game contract to keep fit in the second half of this year.
The Villa announcement coincided with confirmation of Melbourne Heart's name change to Melbourne City.
With City having purchased Melbourne Heart in January, Thursday's announcement underlined how different the Australian club's future could be with Abu Dhabi ownership.
CEO of the City Football Group (CFG), Ferran Soriano, said: "Following a lengthy consultation with the club’s members, partners, the FFA and a range of other stakeholders, we believe the changes announced today will strengthen the club's ties with the community to which it belongs while expanding its ability to grow commercially and harness the many benefits of belonging to the City family."
Villa scored 13 goals for Atletico as the Madrid-based club won their first La Liga title in 18 years last season, while he also started in the UEFA Champions League final defeat to Real.
The former Valencia and Barcelona forward is Spain's all-time leading goal-scorer with 56 strikes in 94 appearances and will be a key man for Vicente del Bosque, as the Europeans attempt to defend their world title in Brazil.
Villa will arguably become the best player to play in the A-League as he will arrive at Heart still at the top of his game, compared to former Sydney FC marquee signings Alessandro Del Piero and Dwight Yorke, who arrived at the ages of 37 and 33 respectively.
The club have released a new logo and kit changes are expected to follow.
