The 24-year-old striker came through the Villa academy and made his first-team debut during the 2005/06 season.
After short loan stints at Watford and Sheffield Wednesday, the Erdington-born forward has gone on to rack up 195 appearances for Villa, scoring 54 goals and earning three caps for England.
Last season was the most prolific of his career yet, scoring 13 goals in 33 Premier League appearances, and he was thrilled to commit himself to the Midlands club until the summer of 2015.
"I'm delighted to carry on and sign this new contract," he said.
"I am happy and I just want to keep on playing for Villa. It's my childhood club.
"It's the club I support and love, and I just want to keep playing and improving year on year.
"I am happy to commit to the club. Hopefully I can progress and keep improving on what I've done so far."
Ryan Giggs and Paul Scholes have become Manchester United icons having spent their entire career with the one club.
Steven Gerrard looks set to follow suit at Liverpool and Agbonlahor intends to do the same at Villa Park.
"If you look at other clubs and the likes of Steven Gerrard with Liverpool, you can't see him playing anywhere else - it's the same with me," he added.
"I can't really see myself playing at any other club. It's the club I love and I'm happy.
"I am happy the club have offered me this contract, which keeps me here for a long time into the future.
"It's a good example for the young players. If they can work hard - the ones coming through - they can get this time at one club.
"It's important nowadays to not move from club to club. If you're happy at a club, stay there. That's what I'm looking to do."
Agbonlahor returned from injury in midweek and Villa boss Gerard Houllier, who took charge in September, has challenged his striker to establish himself in the England squad.
"I'm pleased he's signed this contract," he said. "I just want to make sure that he keeps growing.
"I know his record. He's a local boy, it's good to keep the roots sometimes and the target is to make him a regular player for the national team."
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