The 33-year-old former Victoria's Secret angel shared the news on the micro-blogging site Instagram in which she posted her engagement ring with the caption- "I said yes!!!."
Kerr also added a cartoon to the picture depicting a marriage proposal.
"The couple will have an extravagant wedding, in true Evan style and Miranda certainly won't mind!," a source told E! Online.
The couple, who met in 2014, started dating in June last year.
Kerr was previously married to actor Orlando Bloom from 2010 to 2013, and the pair has five-year-old son, Flynn.