Watts, 44, wore a form-fitting white Versace dress at the premiere, held at Odeon Leicester Square in London, as she posed alongside "Lost" star Naveen Andrews, who plays Diana's former lover Hasnat Khan in the film.
In a rare interview last month with the U.K.'s Mail on Sunday, Khan, a Pakistani heart surgeon whose nearly two year relationship with Diana ended just before her 1997 death in a Paris car crash, said the movie got their relationship all wrong.
"It is based on gossip and Diana's friends' talking about a relationship that they didn't know much about, and some of my relatives who didn't know much about it, either," Khan, whom Diana reportedly called "Mr. Wonderful," told the Mail. "It is all based on hypotheses and gossip."
According to Vanity Fair's September cover story on the late princess, Diana wanted to marry Khan and secretly met his family in Pakistan to discuss the possibilities.
Khan told the Mail he has not seen the film but saw an online, still photo of the actors who portrayed him and Diana.
"You could tell from that picture that it is all just presumed about how we would behave with each other, and they have got it completely wrong," Khan told the paper.
Watts says she felt that, even with Khan's criticisms, Diana's story needed to be told.
"It isolates that last two-year period that centers around that great love story," she said. "But [it] also parallels some great achievements that she did in her work."
"We're interested and fascinated in the most famous woman of her time to this day, and that's sort of a testament to who she was," she said.
Watts herself said she was "torn" about taking the lead role in the biopic and turned down the role twice because, as a mother of two boys herself, she was concerned about how Diana's sons, Princes William and Harry, would feel about her portrayal of their beloved mother.
"I do care deeply about how the princes feel, of course," she told the U.K.'s Sunday Times last month. "There was actually quite an eerie moment in London when I did see Prince William in a restaurant. I got very nervous, because if I caught his eye, I didn't want to interpret a look and think he had a negative feeling about this idea, so I made sure not to look."
Once she agreed to take on the iconic role, Watts said she approached portraying Diana differently than most roles.
"Usually when you take a character you work from the inside and then get to the outside and focus on the appearance and the walk and the voice and things like that," she said. "But in this case I did it in the reverse direction, starting with the look and the voice."
The film, set to be released in November in the United States, is based on the 2001 book, "Diana: Her Last Love," by author Kate Snell. Khan told the Mail he was approached by both Snell and filmmakers seeking his cooperation but declined.