He will boost the German side as they bid to make it through the Champions League preliminaries, having sold their best defender, Dante, to Bayern Munich.
“Alvaro Dominguez was our ideal candidate for the position of left-sided centre back,” sporting director Max Eberl said.
“He was a fixture for Atletico, won the Europa League in 2010 and 2012 and recently made it into the Spanish national team. We are proud that he has chosen Borussia.”