The 26-year-old came through the German second-tier side's youth academy, playing in over 200 games for the club.
Schindler has signed a three-year contract with the Terriers.
"He is good in the aerial challenge and is a very composed player, who is great at reading the game," head coach David Wagner said.
"A big part of our decision to allow Joel Lynch to join Queens Park Rangers was the availability of Christopher.
"I am totally comfortable breaking the club's transfer record to bring him here."
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Huddersfield have signed defender Christopher Schindler from TSV 1860 Munich for an undisclosed club-record fee, understood to be around £1.8m.