Sancho has been without a club since leaving Manchester United on a free transfer in the summer, and Dortmund have repeatedly been mentioned as a possible destination given his history with the club.
Speculation intensified after injuries hit the club's forward line, but Kovac has now dismissed the idea of a reunion, telling Sky Sport he is satisfied with the depth of his first-team squad heading into the busy autumn schedule.
"We had a really good transfer window and we're really well equipped," Kovac said.
The head coach explained that Dortmund had already responded to the long-term injury suffered by summer signing Giannis Konstantelias, who suffered a cruciate ligament tear shortly after his move to the club.
"After Giannis Konstantelias' injury we had to react again, but we reacted really well with Ethan (Nwaneri)," Kovac said. "The squad is already very large. We have around 26 outfield players and a lot of young ones. That's why we don't need to do anything."
Sancho, 26, already has more than 150 appearances for Dortmund on his CV across two spells with the club, scoring 53 goals and providing 67 assists during his time in the Bundesliga.
Konstantelias' injury forced the club into the market for cover in attack, with Arsenal's Ethan Nwaneri arriving on loan as a direct response, easing some of the pressure on Kovac's options in the final third.
The winger's future remains uncertain more broadly, with no club having moved to sign him since his exit from Old Trafford at the end of his contract in the summer, despite reported interest from elsewhere in Europe earlier in the window.
Sancho previously returned to Dortmund on loan during the 2023-24 season following a difficult spell at United, before going out on further loan spells to Chelsea and Aston Villa in the years that followed, without ever fully rediscovering his best form.
Borussia Dortmund's decision-makers, including managing director Carsten Cramer, had previously acknowledged the emotional pull of Sancho's name among supporters, even while stopping short of confirming any concrete transfer plans.