The England international midfielder made it a clear in a statement on Villa’s official website on Saturday that he will remain at Villa Park for the 2015-16 season.
"I'm aware there has been intense media speculation surrounding my future in the last 24 hours and I want to set the record straight,” Delph wrote on Villa’s official website.
"I'm not leaving. I'm staying at the football club and I can't wait for the start of the season and captaining this great football club.”
The Guardian claimed on Friday that City were going to sign the former Leeds United star for just £8 million after activating his release clause.
Sherwood has now spoken highly of the former Leeds midfielder and has underlined his loyalty to the club.
“It's just an example of the measure of the guy really that he decided to stay - the loyalty he's shown to the fans, the football club and the chairman,” the former Tottenham Hotspur boss told AVTV. “And I'm delighted to have him here next season."
Delph is one of the best players in the current Villa squad, and him staying for the 2015-16 campaign is certainly good news for Sherwood’s side.
The 25-year-old created 36 chances for Villa in the Premier League last season. The Englishman had a pass accuracy of 86% and a shot accuracy of 29%, and won 20 headers, 61 dribbles and 47 tackles.