The 16-year-old had been tracked by Sunderland and Leeds, but Villa boss Graham Taylor has won the race and secured the youngster on a three-year scholarship.
York are currently in negotiations with Villa regarding a compensation package.
Minstermen chief executive Keith Usher, speaking to the club`s official website, said: "We are currently talking to Aston Villa regarding compensation for the player, who spent six years coming through our centre of excellence."
Villa financial director Mark Ansell appeared delighted with the signing, adding: "We had permission from York City to approach and speak to Lee Grant and we are now involved in talks with the club regarding compensation.
"We are always interested in the best emerging talent and we believe Lee is going be a very good signing."
Grant became the second youngest first-team player in York`s history when making his debut against Bristol Rovers last term, and his loss will be a major blow to The Minstermen.
York are still some way from being on a sound financial footing, and would have been looking for at least a six-figure fee for such a highly-rated young talent.
