The 26-year-old full-back has joined the Terriers for an undisclosed fee, putting pen to paper on a one-year deal with the option of a further 12 months on top of that.
Durm, who was part of Germany's 2014 World Cup-winning squad, previously worked with Huddersfield boss David Wagner at Dortmund, where he was converted from a striker into a full-back.
"It is not every day that you can bring a player of the quality of Erik to your club. He is a World Cup winner and has played at the very highest level, so this is a fantastic day for Huddersfield Town," Wagner told the club's official website.
"Obviously I know Erik well from our time together at Dortmund and he has all the qualities to be a great success in our 'Terriers Identity'. He is a smart, determined character too. He's desperate to play and that is always a good thing for any head coach.
"He has been very unfortunate with injuries for a year now, but he was training with Dortmund at the end of the season and he's passed our medical with flying colours this week. That's no surprise to me; he was always one of the fittest players at Dortmund and has great physical attributes; real stamina and speed.
"All the same, we will manage Erik's workload carefully in pre-season to help him return to the top level that he is capable of."
Durm's competitive debut for Huddersfield could come at home to Chelsea on the opening weekend of the new Premier League season.