Portugal international Raphael Guerreiro has completed the move from Lorient to Dortmund on a four-year contract.
The 22-year-old defender spent three years at the club, with Liverpool and Barcelona looking to sign him.
But Dortmund have emerged victorious against their rivals, as they sign him for €12 million.
The completion of the deal left Dortmund’s sporting director Michael Zorc delighted as the club added to the signings of Marc Bartra, Ousmane Dembele, Mikel Merino, Emre Mor and Sebstian Rode.
“Raphael Guerreiro is a technically skilled player who feels at home in several positions,” he said.
“We are very happy that he chose Borussia Dortmund.”
Left-back Guerreiro is at Euro 2016 with Portugal and played the full 90 minutes of Tuesday’s 1-1 draw with Iceland in Group F.