Kovac, who took over in early 2025 with the team languishing in 11th place in the standings, turned their season around and clinched a Champions League spot on the final matchday, before finishing runners-up to champions Bayern Munich last season.
"Together, we’ve set a clear course for development and laid important foundations for the future," Kovac said. "We want to build on that. We have a clear vision of how we play soccer, how we perform as a team, and what it takes to achieve our goals."
Dortmund, currently second to Freiburg on goal difference after five matchdays in the Bundesliga, take on Bodo/Glimt in the Champions League on Wednesday.