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The actress will be portrayed the late Princess of Wales in forthcoming biopic Caught in Flight.
Naomi Watts has secured the royal role in Hollywood's tribute, 15 years after the tragic death of Prince William and Prince Harry's mother.
'It is such an honour to be able to play this iconic role,' the 43 year old Australian actress said in a statement.
'Princess Diana was loved across the world, and I look forward to rising to the challenge of playing her on screen.'
The film is to be directed by Oliver Hirschbiegel, the German filmmaker behind Downfall.
'I am delighted to have such a truly exceptional actress who embodies the warmth, humanity and empathy of such a global icon as Princess Diana,' effused Hirschbiegel.
The film is currently slated for release next year.