The winger will leave Manchester United for the second half of the 2023/24 season to head back to Germany on loan.
Sports journalist Fabrizio Romano has confirmed the deal. Romano says that there will not be any buy-out option.
The 23-year-old spent four brilliant seasons at the Bundesliga club where he established himself as one of the brightest talents in world football.
He won the DFB-Pokal in the 2020/21 season, alongside Erling Haaland, and went on to score 50 goals in 137 appearances for the club.
Sancho was also twice named in the Bundesliga team of the season while at the club.
He joined United in 2021 for a fee in the region of £73million, but his move to Old Trafford has not been a successful one.
The winger struggled to establish himself in the first team and suffered a fallout with manager Erik ten Hag that saw him banished from the squad.
He has played just three times this season and will finally get his chance to return to action in Germany.
talkSPORT understands that Dortmund will pay more than £3m, inclusive of wages, and that will rise depending on appearances and Champions League qualification.
