The pair's first meeting at the Red Riding Hood premiere was caught on camera earlier this year and the two soon began dating.
The stars sparked marriage speculation when Reed was spotted wearing a band on her engagement finger at the MTV Movie Awards.
McDonald has now confirmed that he and the Twilight Saga: Breaking Dawn actress are planning to tie the knot.
He told People: "I'm getting married - yes - to the lovely Nikki Reed. That's been really exciting. I'm really pumped up about that. She's an amazing lady, and I'm very lucky to be hanging out with her."
The aspiring singer was reluctant to reveal a wedding date, but teased that announcements regarding the pair's nuptials will be forthcoming.
The Idol star also insisted that meeting Reed was a pure twist of fate, adding: "I'm lucky and very thankful that we crossed paths on this random American Idol journey. That led me to my future wife, so that's cool."
McDonald previously admitted that he didn't know who Reed was before embarking on their romance, a fact which he claimed made him more appealing to the actress.
The Twilight Saga: Breaking Dawn is released in US and UK cinemas on November 18.
Watch Nikki Reed and Paul McDonald's first meeting at Red Riding Hood's premiere below: