The 23-year-old registered 28 goals in 119 Bundesliga appearances for Leverkusen.
Aston Villa boss Dean Smith was elated with the purchase of the pacey winger.
"Leon is a hugely exciting young striker with great pace and creativity," said Villa boss Dean Smith.
"We are now looking forward to watching him show his skills and talents for Aston Villa in the Premier League."
Following the signings of Emiliano Buendia and Ashley Young from Norwich City and Inter Milan respectively, Bailey becomes Villa's third signing in the summer.
The Jamaica winger is set to hit the ground running in his new challenge with the Lions.
"It is a great club with a big history,' Bailey told the club's official website.
"I think it is the next step for me and I am excited to get started.
"I am always putting on a great show for the fans, it has been a great time for me in Germany, I am excited to get started for Aston Villa."
The acquisition of Bailey seems to be a replacement for Jack Grealish who is a £100 million target for Manchester City.
With his exploits in the Belgian Pro League, Bailey attracted interest from top Premier League clubs like Manchester United, Chelsea and Liverpool before heading to Leverkusen.
Leverkusen brought Bailey from Belgian outfit Genk in January 2017 for a fee of €20 million.
Aston Villa finishing 11th in the league log last season will hope to do better this term when they kick start their 2021-22 Premier League campaign away with Watford at Vicarage Road Stadium on August 14.
Bailey will bring on board huge improvement into the Villa's attack with his scoring prowess and pace.
