Holtby, 23, has found himself on the fringes of the team at Spurs recently, and is reportedly unhappy at the London club having started just six Premier League games so far this season.
Its thought a £5million is being lined up to prise him back to the Bundesliga, where Holtby enjoyed success with Schalke, before a move to England last January.
Dortmund are suffering from the injury of Jakub Blaszczykowski, and the loss of several key players, making the prospect of Champions League football uncertain.
It was thought that his old club Schalke were favourites to regain his services, however, Dortmund are now emerging as the forerunners.
The signing of Holtby could revive Dortmund's season, as they currently occupy third, however, Schalke, fifth, are only two points behind.
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