Jacobs proposed to Pickler during a picnic on a Florida beach at sunset.
"I remember saying to Kyle, 'Baby it's like I'm dreaming -- but if this isn't real, I'm going to be very upset!'" she told People.
Jacobs -- who met Pickler two-and-a-half years ago through friends -- added that the couple "just held each other and had the most beautiful prayer" after the proposal.
"We had a little champagne and talked and laughed and cried," he told People.
Pickler also credited Jacobs with showing her how a healthy relationship should be.
"Kyle took away all my fear of marriage and has shown me the way love is supposed to be," she told People.
In addition to the engagement, Pickler said she recently renewed her relationship with troubled dad Clyde Pickler -- who's been sober for a year.
"I'm in the happiest place I've ever been," she told People, adding that she plans to have her father walk her down the aisle.
Pickler is the latest female country reality star who recently got engaged -- joining American Idol fourth-season champ Carrie Underwood and original Nashville Star finalist Miranda Lambert.
"We're all just happy for each other," Pickler told People.
"I'm sure we'll be having some girl talk and we'll share ideas. We just keep joking about how there must be something in the water!"
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