The 2016 MLS MVP has recorded 46 goals and 15 assists over 70 league appearances since the club kicked off in 2015.
"Three years ago, we started a very good project to build this amazing club and they chose me to be the first captain, which I'm still so proud of," Villa said in a news release. "When I look back to those first days in 2014, it's really amazing to see how far we’ve come in such a short space of time and to know that there is so much potential for us to continue growing, on and off the field.
"I'm so happy here in this city and at this club, I am fit and I can do things on the pitch — I'm not ready to go to the sidelines. That's why continuing here and signing this contract was a really easy decision for me."
Villa already has five goals and three assists in seven games to kick off the 2017 season after scoring 23 times last season. NYCFC sits third in the Eastern Conference with a 4-3-1 record.
"It's really good news for me, it's good news for the club and it's good news for David, especially when you look at the way he's been playing and the amount of goals he's scored," NYCFC coach Patrick Vieira said. "The club wanted to give him another year and he wanted to stay for another year. All of the parties are really happy and I’m personally really pleased that he will be with us for that time."