The 23-year-old's new deal will see him stay at Villa Park until 2017.
"I love being here and I'm delighted to be part of a great football club," Westwood told the team's official website.
"You look at the players the manager has brought to the club and they're all young and hungry. I just want to be part of that and hopefully we're building something special here."
Westwood joined Villa from Crewe Alexandra last summer in a deal believed to be worth around £2m.