Netflix confirmed the decision in a press release, adding filming will begin later this year.
In an accompanying quote, Corrin said she was "beyond excited" to be joining the show - a dramatised history of the British monarchy.
"Princess Diana was an icon, and her effect on the world remains profound and inspiring," she said.
The Crown's creator Peter Morgan described Corrin as a "brilliant talent" who "immediately captivated" casting directors.
The actress is set to make her film debut in Misbehavior, a historical drama following a group of of women from the Women's Liberation Movement as they attempt to disrupt the 1970 Miss World beauty competition in London.
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She becomes the latest actress to join the revolving cast of The Crown, as the show jumps forward in time with different stars playing the Royals every two seasons.
Season three — set to debut in late 2019 — will see Olivia Colman take over Claire Foy's role as Queen Elizabeth and focus on the Harold Wilson era between 1964-1970.
Corrin, meanwhile, will begin by dramatising Princess Diana's failed marriage to Prince Charles during the years of Margaret Thatcher's government.
Media captionBBC Rewind: Remembering Diana
Netflix's content chief Ted Sarandos has previously said the plan is for the show to run for six seasons, spanning the Queen's entire life.