The 44-year-old Schubert, a reserve team coach who had only joined in June, took over on Sept. 21 from Lucien Favre, who resigned following a five-game losing start after Borussia finished third last season.
Under little-known Schubert, who was only supposed to be an interim choice, the team won their next six straight league games before drawing 0-0 against Ingolstadt last week, racing from last place to sixth on 19 points.
"In the past eight weeks Andre did an outstanding job and delivered superb results," said Borussia sports director Max Eberl. "We know our team is in good hands with him and that is why we decided to offer him a contract as head coach."
Schubert also earned Borussia their first points in their maiden Champions League campaign with two consecutive draws against last season's finalists Juventus. However, the Germans have already missed out on a spot in the knockout stage with two matches left in the group stage.
(Reporting by Karolos Grohmann. Editing by Patrick Johnston)
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