Philipp is the fourth recent signing for the German Cup winners, who finished third in the Bundesliga to qualify for the Champions League group stage next season, after Omer Toprak, Mahmoud Dahoud and French teenager Dan-Axel Zagadou.
"We are happy to have won over a player who is sought after both here and abroad," said Dortmund sports director Michael Zorc. "He can be deployed in various positions in the attacking midfield, he is a good finisher and is a brilliant prospect."
Philipp, who local media said had cost Dortmund 20 million euros (£17.3 million), is also an option on the wing, with Marco Reus out for several months with a ligament injury.
Philipp, who will feature at the under-21 European Championship later this month, has played 81 first and second division matches for Freiburg since 2013, scoring 18 goals, including nine this season in the Bundesliga.
(Reporting by Karolos Grohmann; Editing by Ken Ferris)
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