The 19-year-old helped Villa into the FA Cup final on Sunday after a starring role in their 2-1 win over Liverpool at Wembley.
Birmingham-born Grealish has represented the Republic of Ireland at under-21 level but is yet to earn a senior cap and could still play for England
He is on England Under-21 boss Gareth Southgate's radar but Sherwood wants Grealish to concentrate on Villa first.
He said: "It's up to Jack where he wants to go
It's purely up to him
What I've got to do is make sure he's got that decision to make
He must be doing something right for Aston Villa if he's got those options
That's my priority.
"Then it's up to Jack to decide where he wants to go
I had the same situation with Nabil Bentaleb, who could have played for France but decided to pick Algeria
I did have a chat with him and he asked me what to do
I just said, 'you've got to go with your heart
Do you think you're French or Algerian?'
"That's the decision he had to make and now Jack has got to make that decision
He has to play a few more times for Aston Villa before he needs to make that decision."
Sherwood handed Grealish his first league start in the 3-3 draw with QPR this month and the ex-Spurs boss insists he is not fazed by the responsibility.
"When some kids come and play with the first team sometimes, they're a bit overawed, but Jack's not," he told TalkSPORT.
"He receives the ball and dribbles it around people
They kick lumps out of him because he's so confident
The ball is his friend, it sticks to his foot
The more opportunities he gets, the better he's going to become."
Source : PA
Source: PA