The film called Spencer, directed by Pablo Larraín, will follow the Princess of Wales across one particular weekend, when she decided her marriage to Prince Charles was no longer working.
It's expected production on the film will begin in early 2021.
Listen to The Spill, Mamamia's daily entertainment podcast, below. On this episode, hosts Kee Reece and Laura Brodnik discuss the casting of Kristen Stewart as Princess Diana.
Since the announcement was made, social media users have responded to the casting, with some claiming that Stewart isn't "sophisticated" or "classy" enough to portray Princess Diana.
But speaking to Deadline, Jackie director Larraín defended the casting decision.
"Kristin is one of the great actors around today," he said.
"To do this well, you need something very important in film, which is mystery. Kristin can be many things, and she can be very mysterious and very fragile and ultimately very strong as well, which is what we need. The combination of those elements made me think of her," he continued.
"The way she responded to the script and how she is approaching the character, it's very beautiful to see. I think she's going to do something stunning and intriguing."
Ahead of Stewart's upcoming role, we look back at her tumultuous life in the spotlight.
Although many remember Kristin Stewart for her role in the Twilight franchise, the 30-year-old's career actually began years beforehand.
As both of Stewart's parents work in the entertainment industry – her father is a stage manager and her mother is a script supervisor – Stewart thought that she would grow up to become a screenwriter or director, rather than an actor.