The 24-year-old moves to the Bundesliga side for the remainder of the 2017-18 campaign, but BVB do not have an option to purchase him once his stay in Dortmund is finished.
Peter Stoger's side were eager to add a goalscoring threat following the deadline day departure of Pierre-Emerick Aubameyang, who joined Arsenal for £56 million.
Aubameyang's exit meant that 18-year-old Alexander Isak was the most senior striker left in the squad, with Dortmund turning to Batshuayi when a loan move to Olivier Giroud failed to materialise.
Dortmund sporting director Michael Zorc praised his new signing, claiming he had been impressed with his ability in front of goal.
"Michy is a young, very interesting striker," Zorc told the club's official website. "He impresses with his high scoring and his extraordinary ability at both Chelsea and in Marseille, in the Belgian league and the national team, his quality has already proven."
Belgium international Batshuayi takes the number 44 shirt at Dortmund and is eager to make a good impression ahead of the World Cup in the summer.
"In order to reach my main goal, I want to play as much as I can and score many goals. In the summer, the World Cup takes place," he told the club's official website.
Batshuayi's chances at Chelsea have been limited this season, with Antonio Conte only handing him three Premier League starts despite Alvaro Morata's inconsistent form in front of goal.