Watts stars in director Oliver Hirschbiegel's film Diana, which focuses on the last two years of the princess's life.
Discussing the film with Manhattan magazine, the actress admitted that playing Princess Diana was unlike any character she has previously portrayed.
"It was the hardest thing I've done because of the pressure of everyone's beliefs about who she was, and the fact that it was just really hard to claim her as my own, since everybody else feels they know her," she explained.
Watts also suggested that while she wanted to accurately capture Princess Diana's physical mannerisms, she also strived to avoid straight "mimicry".
"I don't want to get caught up in mimicry and have a mannered performance - that's the worst thing," she insisted. "I want to try to embody her and get the essence of her. Those things are really important to me.
"The film concentrates on a story that people don't know much about - her love affair with a Pakistani heart surgeon, which I didn't even know about. That love story ended sadly. Everyone remembers the Dodi story, of course."
Diana also stars Naveen Andrews as surgeon Dr Hasnat Khan and Cas Anvar as Dodi Fayed, who died with the princess in a car crash in 1997.
Hirschbiegel's movie is expected to be released later this year.
> Naomi Watts, Naveen Andrews in Princess Diana biopic - pictures
> Naomi Watts on playing Princess Diana: "I want to do her justice"