"The Official Journal of the state will tomorrow (Friday) publish a royal decree by which His Majesty the King will revoke the use of the title of Duchess of Palma de Mallorca by Her Royal Highness the Infanta Cristina," the palace said in a statement yesterday.
Cristina, 49, stands accused of taking part in tax evasion by her husband, the former Olympic handball player Inaki Urdangarin.
Both Cristina and Urdangarin have suffered a dramatic fall from grace since they married in 1997 in a lavish ceremony in Barcelona and were bestowed the titles of Duke and Duchess of Palma by Felipe's father, king Juan Carlos, who unexpectedly abdicated last year.
The couple's multi-million-euro mansion has been impounded by the courts and Cristina was notably absent from ceremonies marking Felipe's ascension to the throne in June 2014.
Cristina's lawyers say she is innocent of any wrongdoing and that she trusted her husband to handle their financial affairs.
The corruption controversy has outraged Spaniards and helped sour the last years of the reign of Juan Carlos, who gave up the throne after nearly four decades hoping his son could freshen up the image of the monarchy.