The agreement, which is subject to the player completing a medical and receiving a work permit, also includes an option to buy, and Philippe will travel to Birmingham in the next 48 hours.
Sources told ESPN that five Premier League sides held talks with Coutinho's camp, with Villa and one other English club showing the most serious interest.
However, the presence of Steven Gerrard, Coutinho's former teammate at Liverpool, helped swing the balance in Villa's favour.
The Premier League club said in a statement: "Aston Villa and FC Barcelona have agreed terms for Philippe Coutinho to spend the rest of this season on loan at Villa Park.
"The agreement, which is subject to the player completing a medical and receiving a work permit, also includes an option to buy and Philippe will travel to Birmingham in the next 48 hours."
Gerrard, who left Rangers to replace Dean Smith as the coach at Villa Park at the end of last year, played a key role in persuading the Brazilian to make the move to the Midlands.
Coutinho, 29, has previously been reluctant to leave Barca, but a desire to play regular football in a World Cup year has led to a change of mind.
Barca made Coutinho their most expensive signing ever when they paid Liverpool €160 million for him in 2018.
He spent the 2019-20 season on loan at German giants Bayern Munich, scoring twice as they beat Barca 8-2 on the way to winning the Champions League, before returning to Spain for the following campaign.
Ronald Koeman said he would help Coutinho rediscover his best form, but injury problems held the player back under the Dutch manager.
He missed the second half of last season with injuries and has started just once, a 1-0 loss to Real Betis, since new coach Xavi Hernandez was appointed in November.
When asked about Coutinho's departure in a news conference on Friday, Xavi said: "It says a lot about Coutinho that he's gone out on loan because he wants to play, and reducing his salary. He's a great pro.
"It wasn't working for him here and he's looked for a solution. He wants to succeed. We will see what happens with Samu [Umtiti.] I don't have any complaints about anyone. All the players are professional. I'm delighted with those that are playing but also those that aren't."
Coutinho tested positive for COVID-19 last week, but should be cleared to fly to England in the coming days and could come into contention for Villa's Premier League game against Manchester United on Jan. 15.