Hofmann has been a regular feature from the bench for Dortmund so far this season, scoring his first goal for BVB in a 2-1 win over Eintracht Braunschweig last month.
Dortmund sporting director Michael Zorc has revealed that talks are ongoing over fresh terms for Hofmann, thanks to the 21-year-old's quick development over the last 12 months.
Zorc told Kicker: "We are currently in talks. It's superb that he made a step forward in his development so quickly. In fact he didn't just take one but two steps forward."
Jurgen Klopp brought Hofmann to Dortmund from Hoffenheim in 2011, with the German youth international making his debut last December.