Tuchel took charge of the German outfit ahead of the 2015-16 season, putting pen-to-paper on a three-year contract, and the club have gone from strength-to-strength since.
The 43-year-old, whose current deal runs out in the summer of 2018, led the team to second in the Bundesliga in the previous campaign, ending up 10 points behind champions Bayern Munich.
Dortmund's displays in the Champions League this term have been particularly impressive, having dominated defending European champions Real Madrid for large parts of the 2-2 draw three weeks ago.
Several top European outfits are said to be showing an interest in the former defender and Watzke has confirmed discussions over an extension will take place.
"We will not make an announcement three months before," he told kicker. "We will hold talks without informing the public. We'll do that [announce the deal] once we have an agreement."