"It has been wonderful getting to know Meghan and to see how happy she and Harry are together", the couple said in a joint statement.
Though Prince Harry had never seen Markle star in Suits, after a mutual friend set the two up on a blind date he knew she was special.
Prince Charles also said he was "thrilled", adding that Ms Markle's parents had given their blessing. "The wedding will take place in spring 2018".
"It was so sweet and natural and very romantic", she said.
He designed the ring himself - it contains one diamond from Botswana, a country he visited numerous times, and two from his late mother princess Diana's personal collection.
Markle showed off her three-stone engagement ring set in yellow gold, which features a diamond from Botswana and two other gems from the collection of his mother, Diana, who died in a vehicle crash in 1997.
"But you know with the ring and with everything else that's going on I'm sure she's..."
Monday's announcement swiftly consumed social media, with Markle's name once again trending on Twitter, alongside "Prince Harry", "Harry and Meghan" and #Royalengagement.
"The ring is obviously yellow gold because that's (Markle's) favorite and the main stone itself is sourced from Botswana and the little diamonds either side are from my mother's jewelry collection to make sure that she's with us on this insane journey together", Prince Harry said in an interview with BBC on Monday. "To see her union with Harry, who shares the same qualities, is a source of great joy for us as parents". Harry said he had to warn his future wife about the media attention they would face.More news: Small business Saturday preperations
"Now it's time to work as a team with you", she said as she turned to Prince Harry.
The pair have been dating since mid 2016, and made their first public appearance as a couple last November.
It described nightly legal battles to keep defamatory stories out of papers, attempts by reporters and photographers to get into her home and the "bombardment" of almost every friend and loved one in her life.
Markle spoke to Vanity Fair in September about being "in love" with the Prince.
The prince explained he chose yellow gold since he knows it's Markle's favorite and included the memories of his mother "to make sure she's on this insane journey with us together".
That statement said the couple were "a few months into a relationship" and it was "not right" that Ms Markle should receive such treatment.
New rules on royal succession came into force in 2015, allowing members of the Royal Family to marry a Roman Catholic and become king or queen.
They are due to marry in the spring of next year.
There is a long-running custom barring royals from marrying Catholics and divorcees.