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Steve Clarke is expected to join as assistant. Clarke was regarded as great number two in his spells at Chelsea and Liverpool under José Mourinho and Kenny Dalglish .
Di Matteo gets a two-year contract apparently.
The Italian, who steered Chelsea to Champions League victory in 2012, has been looking for a role since getting the Spanish Archer from Schalke at the end of last season. Clarke was sacked by Reading in December and both men have managed West Bromwich Albion.
Villa also held talks with the new Derby County manager Nigel Pearson, but rumours persisted that Di Matteo was always owner-in-waiting Doctor Tony's first choice.
Di Matteo has form in the Championship, guiding West Bromwich Albion to promotion.
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