"They are very happily engaged," a source tells Us.
Baccarin, 37, showed off her new diamond ring as the couple attended the 2016 Gotham Independent Film Awards at Cipriani Wall Street in New York City on Monday, November 28.
The O.C. alum, 38, and Baccarin met in 2014 on set of the FOX drama Gotham, where they play James Gorden and Leslie Thompkins, respectively.
As Us previously reported, the couple welcomed their first child together, daughter Frances Laiz Setta Schenkkan, on March 2.
The Southland alum opened up about fatherhood and the meaning behind his baby girl's name during Harry Connick Jr.'s daytime talk show Harry last month.
"Her name is Frances, after my mother," he explained at the time. "I love that name. We call her Frankie. She’s 7 months old, and the cutest thing in the world."
This will be the first marriage for McKenzie and the second for Baccarin. She and her ex-husband, Austin Chick, share joint custody of their son, Julius, 3. In September 2015, during their messy divorce, Chick claimed that he and Baccarin were not separated when she conceived her daughter with McKenzie. In court documents, Baccarin revealed that she planned to marry McKenzie.