The film will also star Cate Blanchett as Cinderella's evil stepmother, reported Guardian online.
The film will be directed by 'Thor' helmer Kenneth Branagh
based on a script from Chris Weitz and pitch by Aline Brosh McKenna. It will be produced by 'The Hunger Games: Catching Fire' producer Allison Shearmur, 'Jack Ryan' producer David Barron and Simon Kinberg.
'Harry Potter' actress Emma Watson was pursued for the lead role as the fairytale princess but turned down the part in March.
James is best known for playing Lady Rose MacClare in the third series of 'Downton Abbey' and has also had roles in 'Fast Girls', 'Wrath of the Titans' and 'Secret Diary of a Call Girl'.
The film is expected to begin production this year for release in 2014.