Princess Eugenie is to marry her long-term boyfriend Jack Brooksbank, Buckingham Palace has announced.
The Duke and Duchess of York said their younger daughter and Mr Brooksbank became engaged while in Nicaragua earlier this month.
The wedding will take place at St George's Chapel, Windsor Castle, in the autumn.
The princess met the former manager of Mayfair club Mahiki while skiing. They have dated for several years.
It will be the second royal wedding at the chapel this year - Prince Harry and Meghan Markle will marry there in May.
A Buckingham Palace spokesman said Princess Eugenie's grandparents, the Queen and the Duke of Edinburgh, were "very pleased and wish the couple all the best".
Engagement pictures of the couple, taken in the Picture Gallery at Buckingham Palace, have been released following the announcement.
In the photographs, Princess Eugenie is wearing a dress by Erdem, shoes by Jimmy Choo and a ring containing a padparadscha sapphire surrounded by diamonds.
What is a padparadscha sapphire?
The padparadscha is a rare pink-orange sapphire and usually comes from Sri Lanka.
The Natural Sapphire company said the gem is named after the colour of a Lotus blossom.
Princess Eugenie's ring - which has the oval sapphire surrounded by diamonds and set on a gold band - is similar in shape and design to her mother's engagement ring, which had a red ruby as the central stone.
The 27-year-old is the second daughter of Prince Andrew and Sarah, Duchess of York, and is eighth in line to the throne.
She will keep her royal title when she marries Mr Brooksbank and will have the option to take his surname.
The princess works in the arts as a director at gallery Hauser and Wirth.
In an interview with Harper's Bazaar in 2016, she said part of her job was planning special projects and managing events, working with artists around the world.
The princess told the magazine she has a dog called Jack - a "total accident" that he has the same name as her fiancé.
She does not carry out any royal engagements, BBC royal correspondent Nicholas Witchell said.
Her public profile or work as a member of royal family would not increase significantly after the wedding, he added.
Mr Brooksbank's parents, Nicola and George Brooksbank, said they were "completely over the moon" and "very excited" for the couple.
"We could not be more delighted with the news of the engagement," they said.
The princess is patron of several organisations including the Teenage Cancer Trust, the European School of Osteopathy and animal charity the Elephant Family.
As a child, the princess suffered from scoliosis and, at the age of 12, had back surgery at the Royal National Orthopaedic Hospital in Stanmore, Middlesex.
In a series of tweets, Sarah Ferguson congratulated her daughter and her fiancé. She said the couple "float with laughter and love" and the announcement was "Total joy!".
"We love Jack and I am so excited to have a son, a brother and a best friend," the duchess added.
"Eugenie is one of the finest people I know and so together it will be pure harmony."
Prime Minister Theresa May congratulated the couple and said she offered her "very best wishes".