The Bundesliga club confirmed the arrival of the 22-year-old after sporting director Rouven Schröder reportedly negotiated a fee below the player’s €3.5 million release clause.
Herold arrives after establishing himself as a key player for Karlsruhe across the past two seasons.
The former Germany Under-20 international made 95 appearances for the club in all competitions, scoring twice and registering 11 assists.
Schröder believes Gladbach have signed a player capable of developing further at Bundesliga level.
“David is a young German player who has developed well,” Schröder said. “He is hungry, willing to improve and sees Borussia as the perfect next step.”
Herold came through Bayern Munich’s academy before initially joining Karlsruhe on loan in 2023.
The move later became permanent for a reported €750,000 fee, with the attacking full-back quickly becoming one of the club’s most reliable performers.
Known for his crossing ability, energy and forward runs, Herold is expected to strengthen a position Gladbach were keen to reinforce this summer.
The defender admitted the transfer fulfils a long-term ambition of reaching the Bundesliga.
“The move to Borussia means a lot to me,” Herold said. “It is the first step into the Bundesliga and a dream I’ve had since I was a little boy.”
Herold also pointed to the atmosphere at Borussia-Park after previously experiencing the stadium during a DFB-Pokal match last season.
Borussia Monchengladbach continue rebuilding under Schröder following another inconsistent Bundesliga campaign, with younger and development-focused signings remaining central to the club’s recruitment strategy.