The winger played 22 times for Villa last term helping them defeat Derby win in the Championship play-off final.
"We are very hopeful that his directness, his pace and his creativity will add to our front line and that he will score and supply goals.
"The experience of being involved in an event the magnitude of the play-offs, and the final in particular, will help to spur him on to have more success and hopefully that will be with Preston North End."
Green played twice as a substitute in the Premier League in 2016 as Villa ended up being relegated form the top flight.
"The gaffer has said he wants to improve me as a player," Green said.
"He wants me to come away from this season as a better player than when I have arrived and more goals is what I need to add to my game and he is confident I can do that."