Ramsey came through the youth ranks of the Midlands club and broke into the Villa first team last season, making 22 appearances in the Premier League.
The 20-year-old has gone a step further this term, appearing in 30 top flight matches so far and scoring six goals.
A statement on Villa's official website said: 'Aston Villa is delighted to announce that Jacob Ramsey has signed a new four-and-a-half-year deal at the club.
'The 20-year-old has put pen to paper on a deal until 2027.
'A product of the Aston Villa Academy, the midfielder has been with the club since the age of six and progressed through the ranks, making his senior debut against West Bromwich Albion in 2019.
'After a short loan spell with Doncaster Rovers, Ramsey made his Premier League bow last term at Fulham before making his full debut against Wolverhampton Wanderers.'
The England u-21 international expressed delight at his new deal and underlined his ambitions for the future.
'It's a proud moment for me, especially for my family,' he told VillaTV.
'I've been here a long time now, come through the Academy, and to sign for another five years at this club, I'm over the moon.'
'There's so many people who have helped me get to this point now, I can't thank everyone enough from Under-9s, to being a scholar, to U23s and then stepping up to the first team.
'It's been good; a lot of up and down moments but it's all part of the journey and I feel like I've been playing well this season so it's nice to be rewarded with a new contract.'
"I think everyone knows that the owners, Christian [Purslow, chief executive] and the gaffer have got big ambitions," added Ramsey.
"So I think the obvious one is to play European football.
"My plan for the next five years is to get this club playing European football again."
