A spring wedding is planned, the friends told The Mirror.
Middleton, the 29-year-old sister of Duchess of Cambridge Kate Middleton, and Jackson, 35, have been dating for more than six months and apparently got engaged prior to the Wimbledon tennis tournament, the British newspaper said.
A formal announcement is expected after Pippa's 30th birthday Friday.
"Pippa loved seeing Kate go down the aisle and now it is her turn for a fairytale wedding," one friend told the Sunday People.
"She couldn't be more sure that Nico is the right man for her. They are such a good fit for each other and their families get on really well. Everyone is so happy for Pippa."
The Mirror said a source said "it remains to be seen" whether the 31-year-old Kate will be a bridesmaid for Pippa, who served that role at the duchess' wedding.
"Everyone knows how close the sisters are but at this stage the final arrangements are a long way off," the unnamed source said. 'Pippa's wedding will be a huge occasion but if Kate is bridesmaid it will be even more high-profile."