The 22-year-old attacker played under Blades boss Ruben Selles in an injury-curtailed loan spell with Hull City last season.
Louie Barry suffered a season-ending injury at Hull City. (Image: PA)
Barry started the 2024-25 campaign on loan in League One with Stockport County and scored 15 goals in 23 league games for the Hatters.
He was recalled by Villa in January to make a switch to the Championship, but he only made four appearances for the Tigers after suffering a knee injury in February.
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Louie Barry helped Stockport County win promotion to League One in 2023/24. (Image: PA)
On his arrival at Bramall Lane, Barry said: “The first time I had conversations about it, I just couldn’t wait to come here. The season is three weeks away, and I know we have a couple of friendlies before, but I am just buzzing to get started.
“I’ve been at Villa, playing games, training and working hard just for whatever will come next. As I say, when a club like this comes calling, you can’t turn it down and I can’t wait to get into it.”
The former Barcelona youth player now joins the Blades, who narrowly missed out on promotion to the Premier League last season following a play-off final defeat to Sunderland.
Barry had a brief loan spell at Portman Road from Villa in the first half of the 2021/22 season, making six appearances under Paul Cook.