The coveted 22-year-old attacker has chosen to move back to his hometown club, his current and future sides confirmed.
The Germany international has been heavily linked with the Bundesliga title holders, as well as Bayern Munich, but according to the official Gladbach website, has opted to join Jurgen Klopp's side, having agreed to a contract until 2017.
"To me it is important to clarify that this is not a decision against Gladbach. I have had a wonderful time here," Reus said. "Borussia have given me the chance to prove myself in the Bundesliga and to develop into the player I am today.
"But I've decided that in the coming season, I'll take the next step and play for a club that contends for the championship and gives me the guarantee to play in the Champions League. This is an opportunity I see in Dortmund."
Reus' future employers were delighted with the attacker's acquisition.
"In Marco Reus we sign our absolute preference for an offensive player," Dortmund sporting director Michael Zorc told his club's official website. We are delighted that Marco has chosen BVB, despite top class competition."
Bayern clarified its interest in Reus earlier this season, but the Bundesliga title holders were able to secure his services for a reported 17.5 million euros, the value of his buyout clause.