The Bundesliga club have been tracking Nwaneri for some time and moved for the England youth international after new signing Giannis Konstantelias suffered a serious knee injury.
Dortmund managing director Lars Ricken described Nwaneri as a "very talented and technically gifted midfielder" and said his arrival was the best sporting solution following Konstantelias' injury.
Nwaneri, who became the Premier League's youngest player when he made his Arsenal debut aged 15 years and 181 days in 2022, has struggled to establish himself as a regular under Mikel Arteta.
The arrivals of Noni Madueke and Eberechi Eze have further increased competition for attacking positions, with Arsenal believing another loan spell represents the best route for Nwaneri's development. The club have no intention of selling him, having handed him a five-year contract last summer.
He spent the second half of last season with Marseille, making 11 appearances across all competitions and scoring twice. His spell was disrupted by the departure of coach Roberto De Zerbi soon after his arrival.
Nwaneri's move to Dortmund does not include an option to buy, while the German club will cover his wages for the season.
His departure comes during a busy period of movement at Arsenal, with Fabio Vieira also completing a permanent move to Hamburg after his loan spell in Germany last season.
