This announcement kicks off a lengthy marriage process, and it also means the princess will lose her royal status.
Under a controversial Japanese law female imperial family members forfeit their status upon marriage to a commoner, whereas male members do not.
In a press conference on Sunday, she said she was first attracted to Kei Komuro's "smile like the sun".
The formal announcement came from Japan's Imperial Household Agency on Sunday, after local media reported news of the planned engagement in May.
Her fiancé, Kei Komuro, is a 25-year-old law firm employee. The couple met five years ago while studying at the same university.
In the televised conference he described the princess as someone who quietly watched over him "like the moon".
Princess Mako, 25, is the eldest child of Prince Fumihito, whose official title is Prince Akishino. She is pursuing a doctorate and works as a museum researcher.
The announcement was originally expected in July, but was postponed after a rain disaster hit western Japan. The wedding is expected to take place next year, according to the public broadcaster NHK.