The 22-year-old broke into the Germany team this season on the back of impressive displays for Freiburg in Germany's top flight.
Neither club has confirmed the transfer fee, but German daily Bild say it is around €20 million.
"Nico Schlotterbeck is a young German international who has developed really well. His profile fits Borussia Dortmund perfectly," said Dortmund sports director Michael Zorc.
Schlotterbeck is the latest Germany defender to switch to Dortmund for next season after Niklas Suele signed on a free transfer from Bayern Munich in February.
Schlotterbeck and Suele are set to form Dortmund's first-choice centre-back pairing next season.
Head coach Marco Rose made it clear the defence needs improving after Saturday's 4-3 defeat at home to Bochum saw Dortmund reach the milestone of 50 league goals conceded this season.
Oladimeji Balogun is a graduate of the University of Ilorin where he studied Microbiology, he is a w...
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