Actor Emma Corrin will take on the role of the late royal when filming begins later this year.
In a statement on Twitter, she said: “I have been glued to the show and to think I’m now joining this incredibly talented acting family is surreal.
“Princess Diana was an icon and her effect on the world remains profound and inspiring. To explore her through Peter Morgan’s writing is the most exceptional opportunity and I will strive to do her justice.”
Princess Diana is Emma’s first major TV role, having previously had a minor part in ITV drama Grantchester earlier this year.
Diana will not feature in the upcoming third series of The Crown, which sees a new cast take on the roles of the Royal Family, as the timeline moves forward from the previous two seasons.
Helena Bonham Carter will portray Princess Margaret and God’s Own Country and The Durrells actor Josh O’Connor will play Prince Charles,
New characters will include Camilla Parker-Bowles, Prime Minister Harold Wilson, played by Jason Watkins.
It was previously announced that Gillian Anderson will also join in series four as PM Margaret Thatcher.
Season three of The Crown will begin streaming on Netflix later this year, with the fourth series following in 2020.