Naomi Watts cast to play Princess Diana

The actress, 43, will take on the role of Lady Di in the biopic Caught in Flight, which focuses on the last two years of the princess's life.

NEWS: Princess Diana movie set to be made

Watts said in a statement: "It is such an honor to be able to play this iconic role. Princess Diana was loved across the world and I look forward to rising to the challenge of playing her on screen."

Oscar-nominated director Oliver Hirschbiegel will be behind the camera of the film, which is based on a screenplay by The Libertine writer Stephen Jeffreys. Hirschbiegel said of Watts: "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."

NEWS: Naomi Watts: Highest paid Aussie actor

The film, which is expected to begin production later this year, will explore Princess Diana's role as a humanitarian as well as her affairs with Dr. Hasnat Khan and billionaire Dodi Al-Fayed, who died along with her in the fatal car crash in 1997.