Klopp, who joined Dortmund in 2008, won the Bundesliga with them in 2011 and the domestic league and Cup double in 2012 before losing to German rivals Bayern Munich in this year's Champions League final.
Ushering in an era of exciting, attack-minded football that has won over scores of fans worldwide, Klopp's arrival marked a turning-point for the 1997 Champions League winners who were on the brink of bankruptcy less than 10 years ago.
"No one needs to call until 2018," a smiling Klopp told reporters in a hastily arranged news conference in Dortmund. "We feel a lot of extraordinary trust and confidence in this club. This is a clear sign."
"To have four and a half years of secure employment in our business is unusual but we will not go soft. Instead we have a huge appetite to take on the tasks at hand. We want to continue the successful path and ideally make it even more successful."
Unshaven and preferring a track suit to a three-piece suit on the touchline, Klopp is a crowd favourite in Germany, though his emotions have landed him in trouble, including in this season's Champions League where he sat out two matches for verbally attacking an official.
He has formed one of the quickest teams on the continent despite losing at least one key player per season to bigger clubs.
Dortmund have hit the bullseye with transfers under Klopp, bringing in players such as Marco Reus, Ilkay Guendogan and Henrikh Mkhitaryan to replace the departing Shinji Kagawa, Mario Goetze and Lucas Barrios.
Dortmund are a point behind Bayern in the Bundesliga after 10 games and are on course to advance in the Champions League group with two wins out of three group matches.
"We want to have the tranquility to plan the future of this wonderful club together," said the 46-year-old former Mainz 05 player and coach who has been among the most sought-after managers in Europe
For Dortmund, the deal is a match made in heaven after years in the Bundesliga wilderness.
"What belongs together should not be separated," club CEO Hans-Joachim Watzke told reporters.
Klopp's success with the team on the pitch has also translated into booming financial results for the Ruhr valley club, the only publicly traded Bundesliga club.
Turnover topped 305 million euros for the 2012-13 season, the best financial results in the club's history.
"That (new deal) is a marker for the team because when we negotiate with new players then they know with whom they will be working. That is helpful," said Watzke.
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