The marriage will be the third for Diamond, 70, who is the father of four grown children.
"Good news coming from sunny LA/ and you're the first I want to tell/ Katie & I just got engaged/ and I hope you wish us well," Diamond tweeted Wednesday.
Diamond did not say exactly how he proposed or if he and McNeil have set a wedding date.
The singer's storied career is to be celebrated in December at the Kennedy Center Honors ceremony in Washington, it was announced this week.
Celebrity Families of 2014 [PHOTOS]