The 32-year-old has agreed a three-year deal with the MLS club which will see him earn three million euros a season.
New York City FC will enter MLS in 2015, and are looking to fill their three designated player slots with star players.
Villa would certainly fit that billing, and looks set to join the new club which was set up by the New York Yankees and Manchester City.
Additional information in Spanish publication El Pais suggests that Villa will train with the Citizens until February, when he will make the move to New York in time for the start of the new season in March.
The former-Barcelona man will not play for City in that time, but will train with the first team to maintain his fitness levels.
Villa was signed by Barcelona for £39.6 million from Valencia in 2010, and Txiki Begiristain and Ferran Soriano had a hand in the transfer at the time.
The pair now both work for Manchester City and are thought to be behind the deal on this occasion too.
He joined Atletico Madrid from Barcelona last summer, and has spent his entire career in Spain, but has been made an offer from New York City so high he “rejected the opportunity to continue playing in Europe.”
New York City look set to take Major League Soccer by storm in their debut season, and they are also hoping to work out a deal for Villa’s Spanish compatriot Xavi as well.