The 27-year-old posted a 4.61 ERA in 50 appearances with Milwaukee last season. He is entering his second season of arbitration eligibility after making $950,000 in 2010.
Villanueva struggled at times last season while pitching out of the Brewers' bullpen. He received a surprise demotion to Triple-A in July before being recalled in September, when he only made spot appearances for the remainder of the season.
The Dominican native's arsenal includes a very effective changeup. Villanueva's best season came in 2007, when he went 8-5 with a 3.94 ERA and 99 strikeouts over 114 1/3 innings. Villanueva has gained starting experience over his career, but he was generally used out of the bullpen during his time in Milwaukee.
Villanueva pitched for the Brewers from 2006-10 and went 20-24 with a 4.34 ERA in 203 relief appearances and 20 starts. He originally signed with the Giants in '02 before being traded to the Brewers two years later.
The Brewers had the option of non-tendering the right-hander prior to Thursday night's 11:59 ET deadline. They decided against that possibility because the club was in talks with the Blue Jays. Deals at this time of year often include players to be named later if the prospect in question is eligible for the Rule 5 Draft, which will take place Thursday at the Winter Meetings.