Diallo, who signed a five-year contract with the Ligue 1 champions, cost a reported €32 million.
The 23-year-old returns to his homeland after two years in Germany.
An undisputed starter for BVB, Diallo made 28 appearances in the Bundesliga and another seven in the Champions League last season. However, he'll face much more competition at PSG, for whom Marquinhos, Thiago Silva, and Presnel Kimpembe are also available in the center-back position.
"It is a great honor to be involved with such a prestigious club as Paris Saint-Germain," Diallo said in a statement. "I have always said that the Parisian project was very attractive. Joining the capital club today is another important step in my career."
Diallo began his professional career at Monaco and played a bit-part role in the club's remarkable run to the Ligue 1 title in 2017. The Tours native joined Mainz before making another quick switch to Dortmund, with whom he showed off his composure and versatility across the backline.