A source told People that the Chicago Bears quarterback popped the question while the couple were on holiday in Cabo San Lucas, Mexico last weekend.
"He surprised her with a quick trip to Cabo to ask her to marry him," the insider claimed.
The pair have been dating since last fall, after being introduced to one another by TV presenter Giuliana Rancic.
The former Hills star opened up about her feelings for Cutler earlier this year, declaring: "I'm in love."
Before becoming involved with Cutler, Cavallari had been linked romantically to former Laguna Beach castmate Stephen Colletti and Brody Jenner.
> Cavallari: 'The Hills was almost scripted'