Reus, who joined in 2012 and also spent a decade at the Ruhr Valley club as a youth player, scored 168 goals in 424 matches for Dortmund while setting up another 128.
Known for his skill, goalscoring ability and clever gameplay, Reus captained the team for five years until 2023.
He won two German Cups but did not collect any other major titles, agonisingly missing out on his first-ever Bundesliga trophy last season on the final matchday.
He could still crown his final season with Europe's biggest club title, with Dortmund in the Champions League semi-finals, where they beat Paris Saint-Germain 1-0 in the first leg this week.
"The club and I decided not to extend the contract," Reus said in a video statement. "I have spent more than half my life at this club. I am proud and happy to have played for so many years here. I am at a loss for words.
"It is important to let you, the fans, know first and because we still have a big goal. We want to go to Wembley (for the final) and bring the trophy back to Dortmund."
They travel to France on Tuesday for the return leg, hoping to reach the final for the first time since 2013. Dortmund won the trophy in 1997.
Dortmund are currently fifth in the Bundesliga with three games left to play.
