The 24-year-old, part of his nation's FIFA World Cup squad, topped the Serie A scoring charts last season with 22 goals in 33 league outings for Tornio.
Immobile will now be tasked with helping to cover the absence of Bayern Munich-bound Robert Lewandowski.
"Borussia Dortmund are a huge club and the idea of replacing Lewandowski really appeals to me," Immobile told a news conference. "I've spoken to (Italy teammates Luca) Caldirola and (Giulio) Donati, and they've told me that the Bundesliga's a fantastic league – one of the best in the world."
With Dortmund having already agreed to a deal to bring in Adrian Ramos from Hertha Berlin, sporting director Michael Zorc feels Immobile is the ideal signing for Jurgen Klopp's side.
"In Ciro Immobile we get a flexible and dynamic attacker who has established himself in an impressive way in a top European league," Zorc told the club's official website. "His outstanding qualities fit perfectly with the profile required by Borussia Dortmund."
Immobile will link up with his new club from July 1, with the details of his transfer left undisclosed.