The 23-year-old defensive midfielder had been linked with top European clubs among them Barcelona and Manchester United.

However, a recurring back injury has destroyed his season. He last played in Germany's 3-3 draw with Paraguay last August shortly after his sole league appearance on the opening day of the season.

Dortmund coach Jurgen Klopp has said the eight-times capped Gundogan is not expected to play again this season and had been ruled out of June's World Cup in Brazil.

Borussia announced they had extended his contract just before their German Cup semi-final at home to VfL Wolfsburg on Tuesday.

"I am very grateful that my club has given me this opportunity to continue to be part of this special team and this very special environment," said Gundogan.

"I will do everything to help my team-mates again soon and I am very optimistic about the coming weeks and months."

Dortmund for their part said they hoped that he would return to his best form next season.

"We are very pleased to have signed his deal against the backdrop of the injury-related special situation," said Dortmund's director of sport Michael Zorc.

"We hope that Ilkay will contribute and reach his full potential for Dortmund next season."

Dortmund are currently second in the Bundesliga and set to qualify directly for the Champions League next season having bowed out at the quarter-final stage last week despite a 2-0 win at home to Real Madrid, losing 3-2 on aggregate.