Brewers boss Paul Peschisolido told BBC Radio Derby: "There's no hiding the fact we've been looking for a striker.
"We've been watching James for a few weeks now and I've liked what I saw. He's a big lad, a goalscorer and he's got a good attitude."
Collins, who has yet to play for Villa's first-team, spent a three-month loan period with Darlington in League Two last season.
The Republic of Ireland Under-21 international was a prolific scorer at youth level, scoring 23 goals in the Premier Academy League in 2008/09.
Source: BBC Sport