The 15-year-old has been taken into protection and Forrest, 30, has been arrested, the force said.
They were found at around 12.15pm today UK time in the Bordeaux area.
The pair were both "safe and well", the force said, and Forrest, who was born in Inverurie, Aberdeenshire, has been arrested on suspicion of child abduction.
They were found as a result of information that came after the case received media coverage in France, police said.
Forrest and Megan's families have been informed and arrangements will be made for their return to the UK, the force added.
The alarm was raised when Megan, from Eastbourne, East Sussex, failed to go to school a week ago and it was discovered that she had travelled with Forrest on a ferry from Dover to Calais the previous evening.
They had tickets to return to the UK on Sunday, but did not use them.
Both their families made emotional appeals for their return, with Mr Forrest's father Jim, of Petts Wood, south east London, begging his son or the teenager yesterday to call or email home.
Flanked by his wife Julie, he said: "Hi Megan, hi Jeremy, I hope this message reaches you and you are both OK. There are a lot of people back home that are desperate to hear from you. All I am asking is for one of you to make a call, send an email, so we know you are both safe.
"We are all here for you both. Please, please get in contact."
There were reported sightings of the pair in Paris, and Sussex Police received seven phone calls with information after Megan's disappearance was featured on the BBC's Crimewatch last night.
On Monday the 15-year-old's mother Danielle Wilson, sitting beside father Martin Stammers, also pleaded for her safe return.
She said: "You know that your adorable princess wants her adorable mermaid back."
Mr Stammers said he was "thrilled to bits, just over the moon" at news of his stepdaughter's return.
He said: "The relief, the outpouring of love from everyone has just been amazing. We're so happy."
He said he felt "pure elation, pure relief that she is just safe and well" and went on: "As time goes on you despair even more, but knowing Megan, knowing the girl she is, I always had that belief that she was strong enough within herself to remain safe and well."
He said there was no indication of when she would return to the UK, and thanked police and campaign supporters on Twitter and Facebook who helped maintain publicity of the case.
Mr Stammers added: "I'm just happy. I just know in my heart that she's safe and well and she will be back with us very soon.
"We have our daughter back, it's just such joy."
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