German tabloid Bild said the Germany midfielder would have improved terms under the new deal. "I am very grateful for the club's trust. I want to repay that trust by giving my best for Borussia Dortmund," Nmecha said in a statement.
Nmecha, 25, came through the Manchester City academy before moving to Wolfsburg in 2021. He joined Dortmund two years later for a reported fee of 30 million euros ($34 million).
Having improved under coach Niko Kovac, who also managed him at Wolfsburg, Nmecha reportedly attracted the attention of several Premier League clubs, including a potential return to City. Nmecha has scored 13 goals in 108 matches for Dortmund. He has played six times for Germany, scoring once.
Sporting director Sebastian Kehl said Nmecha is "extremely valuable to us in the center of the pitch, and he always finds creative solutions, even under pressure.