Villis, who spent the whole of last season on loan with The Gulls and only recently signed a new one year contract at Home Park, has opted for a move to Plainmoor.
Part of the deal means that Argyle will gain 50% of any future transfer fee should 21-year-old Villis be sold by The Gulls.
"It's the sort of deal in which everybody wins - we get the player, the player gets the chance to break into regular first-team football and his old club retain a chance to cash in if he makes it big time. I'm very pleased he's joined us," Torquay chairman Mike Bateson told his clubs official website.