The 27-year-old, who impressed for Poland against England last week, is regarded as one of the best right-backs in European football.
Chelsea are among a number of teams that have been linked with the defender, but Piszczek has committed his future to the club.
"I have been playing for two years in Dortmund and I am happy with the football culture, the club and the fans. It is a great feeling for to play for this special club. It is an exceptional club to play for," he told reporters.
His new contract will expire in 2017.