The 24-year-old attacking midfielder has had a fine season so far, scoring eight goals and setting up another two with Gladbach in third place behind leaders Bayern Munich and VfL Wolfsburg, two points ahead of Bayer Leverkusen.
Herrmann has also netted four times in the Europa League.
"I feel at home here," said the player, who started out in the club's youth teams in 2008, in a club statement. "These are conditions for me to continue down this successful path that should also again lead to the national team."
"But with Borussia I also have goals. The Europa League matches this season wet my appetite for more. I want to be successful with the club both nationally and internationally."
Herrmann, who in 2013 won a Germany call-up but has yet to earn his first cap, has made 185 appearances for Gladbach scoring 35 goals in all competitions.
(Reporting by Karolos Grohmann; Editing by Amlan Chakraborty)
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