The striker has committed his future to the club until 2017 after a "full and frank discussion" with manager Paul Lambert.
It marks a sudden change of heart from the 22-year-old, with Villa confirming only 11 days ago that he had asked to leave.
Villa manager Paul Lambert said: "I had a full and frank discussion with Christian Benteke on his return to training this week regarding his future. It is my opinion that the best thing for Christian is to remain at Aston Villa.
"He enjoyed a terrific first season at the club and can use that as a platform to hopefully enjoy more success this season.
"I'm delighted, having time to re-evaluate his future, Christian has decided to commit to the club. It's a huge bonus and I'm sure the supporters are every bit as delighted as me to have him on board and raring to go."
Benteke said: "I spoke with the manager when I returned to training and we had a good talk. I am very happy to be back here in Birmingham and at Aston Villa, and to sign a new contract.
"This is a great club and it has given me a lot. Now I have to give back to my team-mates and the fans who have always been right behind me.
"The end of last season was very good and the lads were very strong. It was not easy but we came through it and the confidence is high. So everyone knows what we have to do now - be better. I need to be better than last year."