The 23-year-old, who will depart for UEFA EURO 2012 on Monday with the national team, follows the examples of Felipe Santana, Patrick Owomoyela and Mitchell Langerak in agreeing a new deal with the Westphalians.
"As soon as the club approached me and asked if I would like to extend, I knew immediately that I want to continue being part of this team, which is so successful and is so much fun to be in," he said.
Hummels has made a total of 121 Bundesliga appearances and scored 12 goals, becoming a Germany international in May 2010 after impressing alongside Neven Subotic in the league's youngest central-defensive partnership.
His progress has not gone unnoticed, which is why tying him down to a new deal is a major achievement for the league champions and DFB-Pokal holders.
"Mats Hummels could have moved to practically any club in Europe, but he has chosen Borussia Dortmund and that is a great story," Dortmund coach Jurgen Klopp said on the club's website. "Mats is a highly-intelligent player in terms of winning tackles and closing people down and I don't know anybody across the whole continent who does it as well as he."
After the ink dried on the paperwork, Dortmund general manager Hans-Joachim Watzke added: "Mats is a true leader and for him to commit his future to Dortmund for such a long period of time is a clear show of faith in our philosophy."
Hummels joined Dortmund from Bayern Munich in 2008, initially on an 18-month loan deal which was soon made permanent.