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, first reported by local media, is expected to reignite debate on the ever-shrinking royal family.
Ten things about Japan's emperor：
Princess Mako and Kei Komuro met in 2012 when they studied at the International Christian University in Tokyo.
He once worked as "Prince of the Sea", promoting tourism in Japan.
Asked about their engagement plans, Mr Komuro on Wednesday was quoted as saying: "Now is not the time for me to comment, but I want to speak at the right time."
The Imperial Household confirmed for US broadcaster CNN that plans were under way for the princess's engagement.
Emperor Akihito, 83, hinted last August that he wanted to stand down, saying his age could interfere with his duties.
Japan is currently considering legal changes to allow the emperor to abdicate.
No Japanese emperor has abdicated for two centuries and the law currently does not allow it but new legislation is expected to leave unchanged a males-only succession law.
"There is no change in our view to proceed with consideration of steps to ensure stable imperial succession," Chief Cabinet Secretary Yoshihide Suga was quoted as saying by Reuters news agency.
There are only four heirs to the Chrysanthemum Throne: Akihito's sons Crown Prince Naruhito and Prince Fumihito, Prince Hisahito (Fumihito's son) and the emperor's younger brother, Prince Masahito.
Copyright © 2004-2017 iPanel Online Marktet Research All Rights Reserved.