The prince and his bride-to-be will say "I do" in the historic surrounds of Windsor Castle's 15th century St George's Chapel.
As palace aides announced more details of the big day, it was revealed that American Ms Markle is to become a British citizen, and will be both baptised and confirmed ahead of the religious ceremony.
The royal family will pay for the wedding, including the church service, the music, the flowers and the reception, the palace said.
But the security costs for the high profile celebration will fall to the taxpayer.
The Queen will be there, as will the rest of the royal family, along with Ms Markle's parents Thomas Markle and Doria Ragland.
Prince George and Princess Charlotte are also expected to take on the roles of pageboy and bridesmaid. The palace revealed that Ms Markle has met them on many occasions.
Kensington Palace is yet to confirm the exact date of the nuptials, who will be Harry's best man or Ms Markle's bridesmaids, and how many guests will attend.
The Prince of Wales and the Duchess of Cornwall, who had their religious blessing in the same chapel in 2005, were joined by around 800 people.
Harry's communications secretary Jason Knauf said Windsor was a "very special place" for the prince, and that he and Ms Markle had regularly spent time there together during their 16-month romance.
He said the couple were delighted to be holding the wedding in the castle's "beautiful grounds".
Mr Knauf said the newly-engaged pair, who were grateful for the warm wishes they had received, "want the public to feel part of their day" - and are looking at ways to achieve that.
They will be putting their stamp on their wedding day, and are leading the arrangements.
Mr Knauf said: "The wedding will reflect their characters and personalities as you would expect anyone's wedding to.
"It's a royal wedding and it will rise to that standard as well. But like the Duke and Duchess (of Cambridge) did, it will reflect who they are as a couple.
"It was important for them to signal after the response they've had in the last 24 hours that they will be keeping the public in mind as they put plans for the wedding in place."
He added: "This wedding, like all weddings, will be a moment of fun and joy."
Kensington Palace also revealed that Harry and Ms Markle will carry out their first official engagement together in Nottingham on Friday.
The pair will visit the Nottingham Contemporary which is hosting a Terrence Higgins Trust World Aids Day charity fair, and also visit Nottingham Academy to meet headteachers taking part in the Full Effect programme.
There will also be a walkabout by the bride and groom-to-be - a royal rite of passage for Ms Markle.
Harry and Ms Markle are planning to tour the UK in the six months leading up to the wedding so the former actress can get to know her new home.
Ms Markle will not be continuing her work on gender with the UN or with other organisations such as World Vision Canada, but instead will be starting her charity work as a full-time royal afresh.
She will become the fourth patron of the Royal Foundation of the Duke and Duchess of Cambridge and Prince Harry after the wedding.
It also emerged that while one of Ms Markle's beloved rescue dogs Guy was legally allowed to stay with her in the UK, the other - Bogart - would not be joining her.
"Bogart is now living with very good friends," Mr Knauf disclosed.
Official engagement portraits of Harry and his fiancee will also be released at a later date - but it has not yet been decided who will be taking them.
The engagement of Harry and Ms Markle, who met on a blind date, was announced on Monday.
Harry proposed during a cosy night in over a roast chicken dinner and has told of how ''the stars were aligned'' when he fell for his future wife.
A May wedding gives the Duchess of Cambridge time to recover after the birth of her third child, which is due in April.