The 46-year-old took over at Signal Iduna Park in 2008 and led the club to consecutive Bundesliga titles in 2011 and 2012.
Dortmund also reached the UEFA Champions league final last term, but they were ultimately beaten by Bayern Munich, who also took the Bundesliga crown back with a crushing 25-point margin.
Klopp recently revealed he rejected the advances of Chelsea and Manchester City in the close-season and has further affirmed his commitment to Dortmund with the new deal.
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