The Bundesliga outfit will sign the Turkey international for a reported 7 million euro transfer fee when his loan deal ends on June 30
The former Liverpool midfielder is currently starring during his second spell with Jurgen Klopp’s side, a loan agreement that expires on June 30.
The Bundesliga side has now confirmed it will take up an option with Madrid to sign the 25-year-old on a full-time basis once the current season ends.
Neither club will officially comment further until the deal goes through, but reports suggest the transfer fee will be in the region of 7 million euros.
"We informed the representatives from Madrid around the time of the Champions League quarterfinal that we plan to make use of this option to sign him,” Dortmund CEO Hans-Joachim Watzke told Ruhr Nachrichten.
Madrid won a thrilling tie against Dortmund 3-2 on aggregate to seal a place in the Champions League semifinals, with Sahin playing a part in the first leg at the Bernabeu.
The Turkey international has been a key performer for Die Schwarzgelben this season, appearing in all 29 of their Bundesliga games to date, with an additional nine Champions League selections and three DFB-Pokal outings.