The clubs have not disclosed the financial details of the transfer but German media reported that Dortmund would pay 30 million euros for Nmecha.
Nmecha joined Wolfsburg in 2021 from Manchester City, where he was mainly part of the youth teams.
"Felix Nmecha is a fast, technically skilled and physically strong player who will enrich our midfield both offensively and defensively with his profile," Dortmund sporting director Sebastian Kehl told the club website.
"He enjoyed a first-class education at Manchester City and made a name for himself in Wolfsburg last season.
"We're happy to have gotten another German national player to join us and we're convinced of it that Felix's development is far from over."
Nmecha made his first and only Germany appearance so far in March in a friendly loss to Belgium.
