Prince Harry and Meghan Markle will marry at St George's Chapel, Windsor Castle next May, Kensington Palace has said.
The royal family will pay for the wedding, including the service, music, flowers and the reception. It has not been announced who will pay for the dress or who will design it.
The ceremony will be smaller than that of Prince Harry's brother, but is likely have a similarly dazzling guest list.
Prince Harry's communications secretary Jason Knauf described Windsor as a "very special place" for the couple, saying they had spent time there together since meeting in July 2016.
US president Donald Trump faces a snub from the British royals with no plans to invite the American leader when Prince Harry weds Ms Markle next year.
Bride-to-be Ms Markle, 36, has previously publicly criticised the Republican president, while it has been reported that Prince Harry, 33, has aired similar views in private.
Unusually for the prolific tweeter, Mr Trump has not made any comments on Twitter about the much discussed engagement between the fifth in line to the British throne and the American actress.
Former US President Barack Obama is widely seen as more likely to get an invitation to the royal wedding scheduled for next May.
"Michelle and I are delighted to congratulate Prince Harry and Meghan Markle on their engagement. We wish you a lifetime of joy and happiness together,” Mr Obama tweeted.
In October earlier this year the former president and the young royal were overheard discussing Harry and Meghan’s relationship during the Invictus games. The two men are affectionately referred to as having a “bromance”, a slang term for a close friendship between two men, in the British press.
The Obamas were not invited to the wedding of Prince William, Harry’s brother, and Kate Middleton but the reason was believed to be largely down to the cost of protecting the leader of the US at such an event.
Mr Trump is expected to visit the UK in early 2018 after an earlier visit was delayed following a backlash from British MPs and fears of mass protests. The transatlantic royal wedding could therefore prove a fitting vehicle for the presidential visit.
The rest of the guestlist at this early stage remains unknown, but there are serious question marks over whether Prince Harry’s grandmother, the Queen, will attend.
When the engagement was publicly announced on Monday, the Queen was one of the first to congratulate the couple, saying she was "delighted."
However, as head of the Church of England, which teaches that marriage is for life and only reluctantly accepts divorce, the Queen may feel it is inappropriate for her to attend as Ms Markle is a divorcee. She has given them permission to get married at St George's Chapel in Windsor.
The Queen missed her son Prince Charles’s wedding to Camilla Parker-Bowles in 2005, attending only the reception afterwards. The couple are both divorcees.
The engagement is unusual in a number of ways.
Britain’s Prince Harry proposed to his American actor girlfriend Meghan Markle as they prepared a roast chicken dinner at a royal residence in London, he revealed last night.
In an interview with the BBC’s Mishal Husain - who grew up in the United Arab Emirates and Saudi Arabia - the pair told of how their courtship had to be conducted in a different way to the traditional Western rules of dating.
“We've had to sort of reverse the whole process, and cosy nights in, in front of the television, cooking dinner just the two of us by ourselves in our little cottage, rather than going out for dinner and being seen in public, so we have, we've reversed the whole process which ... it's provided different opportunities, and it's made us a hell of a lot closer in a shorter space of time without question,” Prince Harry explained.
The couple who have known each other for a year and a half after being set up on a blind date by a friend, revealed that Ms Markle was quick to say yes when Prince Harry got down on one knee.
“She didn't even let me finish, she said 'Can I say yes, can I say yes' and then were was hugs and I had the ring in my finger, and I was like, 'Can I, can I give you the ring?' She goes - 'oh yes the ring',” he said.
The ring was designed by Prince Harry and includes two diamonds from his mother Diana’s jewellery collection and a diamond from Botswana, the setting for a holiday the couple shared early on in their relationship.
Deflecting criticism that the pair have not been together for a long time, Ms Markle said: “I don't think that I would call it a whirlwind in terms of our relationship. Obviously there have been layers attached to how public it has become after we had a good five, six months almost with just privacy, which was amazing.”.
Buckingham Palace said Ms Markle, a Protestant, will be baptised and confirmed before the wedding.
The US actress and activist also intends to become a British citizen and will work towards it in the coming years.
British-American historian and author Amanda Foreman explained to the BBC why the match is so important in socio-historical terms: “I think what makes this match extraordinary is that it’s the royal equivalent of a tsunami."
Ms Foreman pointed out that British monarchs have married or had relationships with actresses, Americans and divorcees before.
“They’ve all been there but they’ve never been in one person and that’s what makes it so exciting,”she said
Many on social media have rejoiced at a woman of colour joining the British royal family.
