The 36-year-old, who won the 2008 European Championship and the 2010 World Cup with Spain, said he would be leaving New York City FC after scoring 80 goals in 124 games for the Major League Soccer side.
Villa made the announcement on YouTube and the move was later confirmed by Kobe in a statement.
"It's decided," he said in a video. "I have a new destination. A great challenge awaits.
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"New country. New culture. New team-mates. Hello Japan. Hello Vissel Kobe."
Villa was Iniesta's team mate during a very successful period for the Spanish giants and won two La Liga titles and the Champions League in 2011.
Iniesta scored on Saturday as Kobe wrapped up their J.League season with a 3-2 victory over Vegalta Sendai, finishing 10th in the 18-team league.
(Reporting by Jack Tarrant; editing by Sudipto Ganguly)
