The 34-year-old, who has won three Bundesliga titles while at the club, will retire once his deal ends next summer.
"Borussia Dortmund, our wonderful team, the fans and the city of Dortmund have been my home for many years," Kehl told the club's official website.
"I am looking forward to my last year in the Bundesliga. Then it is the right time for a new chapter in my life."
The former Germany international joined Dortmund from Freiburg in 2001.