The American Idol judge proposed and presented a diamond engagement ring to Hussainy at a dinner over Valentine's Day weekend, reports The Mirror.
It is thought that the couple have been together for six months.
"He wanted to do something unexpected and out of character on Valentine's Day and decided to splash out on a ring," an insider said.
The source added: "Mish was speechless and gave him a huge kiss. He is besotted with her, and she him."
Cowell's alleged proposal comes two years after he claimed that he would never marry since splitting with former girlfriend Terri Seymour.
Hussainy, a 36-year-old make-up artist, met Cowell on the set of American Idol.