The 22-year-old, who has enjoyed a breakthrough season in 2021/22, has agreed terms on a five-year deal through to 2027 at Dortmund, where he is set to form part of a new-look back line alongside fellow centre-back Niklas Süle, who joins from Bayern Munich.
"Nico is a young Germany international who's had great development. His profile is perfect for BVB," said outgoing sporting director Michael Zorc.
His successor, Sebastian Kehl, added: "Nico's journey reminds me of my own, coming as a young Germany international from Freiburg to BVB. I hope Dortmund becomes as much as a home for him as it did for me.
"Nico has huge potential. He's chosen by no means the financially best offer from numerous interested clubs, but chose BVB to develop here."
Schlotterbeck has made 30 top-flight appearances for Christian Streich's side this term, forming a key part of their quest for a top-four finish. In addition to registering four goals and one assist, he has contributed to 10 clean sheets for the Black Forest club, winning 371 challenges and 119 aerial duels, respectively fifth and sixth best across the league.
He joined Freiburg in 2017 from Baden-Württemberg rivals Karlsruhe, and made his Bundesliga debut in the 2018/19 campaign. The left-footer made a further 13 outings the following season, primarily as a substitute, before proving his top-flight chops on a season-long loan at Union Berlin in 2020/21.
"In discussion with all parties, I've decided to announce my summer 2022 move to Borussia Dortmund. I'd like clarity for Freiburg, Dortmund and myself. It's important in the final straight to focus fully on the final three games for Freiburg, which we can hopefully do well in. I'm then looking forward to a new challenge at BVB."
Watch: Nico Schlotterbeck - rising star
So good has Schlotterbeck been this season, with his ability on the ball and passing qualities from deep also among his chief attributes, that he was called up to the senior Germany squad for the first time by Hansi Flick in September 2021. He earned his first cap in March 2022 in a friendly against Israel, following that up a few days later with a second appearance in a freidnly draw with the Netherlands.
About the clubs SC Freiburg
Europa-Park Stadion
Borussia Dortmund
SIGNAL IDUNA PARK
Share
Cagliari 
Inter 
Lazio 
Atalanta 
FC Porto 
Boavista 
Udinese 
Torino 
Napoli 
Venezia 
Leicester 
Manchester City 
Everton 
Nottingham Forest 
Tottenham 
Wolverhampton 
Celtic 
ST Johnstone 
Motherwell 
Rangers 
Juventus 
Fiorentina 
West Ham 
Liverpool 
Sampdoria 
Pisa 
AC Milan 
Roma 
Sporting CP 
Benfica 
Ipswich 
Chelsea 
Manchester Utd 
Newcastle 
Brentford 
Arsenal 
Nacional 
Valencia 
Real Madrid 
Aston Villa 
Bournemouth 
Crystal Palace 
Almeria 
Sevilla