The Germany Under-21 international has added 12 months to his contract with his hometown club as they look to secure the future of a player they see as having plenty of potential
The 19-year-old's new deal comes with a salary rise, and adds an extra year to his previous agreement.
"Marc-Andre is an outstanding talent in German football and we are pleased that he has committed himself to another year at Borussia," Gladbach sporting director Max Eberl told the club's official website.
"He has a great career ahead of him, we can be proud to have such a player training with us."
A Germany U21 international and native of Monchengladbach, Ter Stegen has been associated with his hometown club since the age of four.