Caught in Flight will tell the story of a secret affair between Lady Diana Spencer and heart surgeon Dr Hasnat Khan, reports Thompson on Hollywood.
Downfall director Oliver Hirschbiegel is attached to direct.
The movie has been described as a "love story between a princess locked in a tower and an ordinary man", and is go into pre-production in March 2012.
Khan remained silent on the alleged affair for over a decade before speaking of it to The Telegraph in 2008.
American actress Chastain is best known for her roles in The Tree of Life, The Debt and The Help.
Keira Knightley was previously attached to play the princess in a biopic from Pathe.
> Britney Spears asked for picture of Princess Diana before London show
Watch Jessica Chastain in a clip from The Debt below: