Cruise, speaking at a Paris news conference with Holmes, said: "Yes, I proposed to her."
The couple often shared smiles and blushes as Cruise turned to look at her, with a massive diamond ring on her finger.
"It was early this morning at the Eiffel Tower, so I haven't slept at all," he said. "Today is a magnificent day for me, I'm engaged to a magnificent woman."
Asked why he chose the famed Paris landmark, he said: "I've never been to the Eiffel Tower. It's Paris, it's a beautiful city, it's very romantic."
Cruise said no date for a wedding has been set: "We haven't discussed that — one step at a time," he said. "Let's see. We're not sure."
Cruise, 42, was in Paris to promote the French release of the Steven Spielberg (search) film "War of the Worlds" next month. He and 26-year-old Holmes went public with their romantic relationship in April.
Holmes did not speak to reporters, but at one point, Cruise whispered to her: "Are you OK?" Afterward, the two hurried into a car before leaving for a promotional event in Marseilles, southern France.
"I wish them the happiest marriage that anyone has ever had," said Dakota Fanning, the child actress who co-stars with Cruise in the film. She sat next to Holmes during the news conference.
Cruise and Holmes have faced repeated rumors of marriage. The relationship started after Cruise split from actress Penelope Cruz (search), and Holmes and actor Chris Klein called off their long-standing engagement.
While in Berlin two days ago, Cruise dismissed speculation by tabloid newspapers and celebrity gossip columns that their relationship is a stunt to promote their new movies.
Holmes was in London earlier this week to promote her new film, "Batman Begins." She had also dismissed accusations that the couple had staged a relationship for publicity.
Holmes said then that she was embracing Scientology (search) — Cruise's religion. The former star of television's "Dawson's Creek" grew up with a poster of Cruise on her bedroom wall and has said she grew up wanting to marry him.