The 18-year-old, who became Germany's youngest World Cup player when he featured at the tournament in Qatar in November, has long been a target for several major European clubs.
Moukoko enjoyed a strong first half to the season that led to his Germany call up, having scored six Bundesliga goals and set up another three.
"Youssoufa is an exceptional player, whom we have trained and in whom we still see great development potential," Dortmund sports director Sebastian Kehl said.
Moukoko, who has been at Dortmund since the age of 12, is considered among the most gifted forwards of his generation, having become the youngest ever Bundesliga scorer at 16.
"It is no secret that I feel well at Dortmund," Moukoko said in a club statement. "I played youth football here, took my first steps in professional football and now I am ready to take the next step in my development together with the club."