The 25-year-old eldest granddaughter of Emperor Akihito will become engaged to law firm worker Kei Komuro, also 25, whom she met while studying together.
Japan's imperial law requires a princess to leave the royal family after marrying a commoner.
The move is expected to reignite debate on royal succession, with the emperor also possibly abdicating soon.
Princess Mako and Kei Komuro met in 2012 at a restaurant, when they were both studying at the International Christian University in Tokyo.
The Imperial Household told local media that plans were under way for the princess's engagement.
The engagement will only be official after a ceremonial exchange of gifts, local media said.
Public broadcaster NHK said the wedding is expected to take place next year.