The 31-year-old joined the Westphalians from 1. FC Kaiserslautern in 2012 and has emerged as a reliable pillar of Jürgen Klopp's team this season.
"What Oliver Kirch has shown over the past few weeks and months is extraordinary," said BVB's sporting director Michael Zorc. "He's a vitalising factor within the team and fits in perfectly at Borussia Dortmund, both in a sporting sense and as a person."
Kirch's initial two-year contract with BVB was due to expire at the end of June and the 31-year-old expressed his delight at being offered an extension. "I'd like to thank the club for the faith they've shown in me and the opportunity to be able to measure up to world class players at this level every single day," he said.
"I will do everything I can to be able to celebrate even more success next season." added Kirch, who featured eight times for BVB this term, finding the net in a 2-2 draw with Bayer 04 Leverkusen on Matchday 32.
Kirch also succeeded in stifling the attacking threat of Real Madrid CF's Karim Benzema and Gareth Bale in the UEFA Champions League quarter-final second leg between the two clubs, which Dortmund won 2-0 after going down 3-0 in Madrid.