Herd, who made his Premier League debut against Manchester United earlier this season, has committed himself to Villa until the summer of 2014.
The 21-year-old becomes the latest Villa academy product to put pen to paper on a new deal after Marc Albrighton, Barry Bannan, Ciaran Clark, Jonathan Hogg and Gary Gardner.
Perth born Herd, who joined Villa as a 15-year-old, was included in Australia's squad for the current Asian Cup although he did not make the final party.
He can play in central midfield or full-back - the position he was occupying when scoring a hat-trick for the reserves in a 10-1 win over Arsenal on Monday.
Herd said: "When I got offered the contract, it wasn't a difficult decision to make at all. A few of the other boys have done really well and have all signed contracts so it is nice to follow in their footsteps."
Source: PA
Source: PA