The black and white close-up head shot, taken at a photocall with Bailey in 1988, shows the princess staring at the camera, with a slight smile on her closed lips.
It comes after the release of the first episodes from the final season of Netflix’s The Crown, which explores the events surrounding the death of Diana and her lover Dodi Fayed in a car crash.
On the cover, Diana’s hair is a brushed back in soft bob and she is wearing sparkling diamond and emerald teardrop earrings and an asymmetric off the shoulder outfit.
The photo resides in the National Portrait Gallery in London and it is the first time the image has appeared on the cover of a magazine, Tatler said.
The January issue, available from December 7, is titled Diana – The Battle For Her Legacy.
Diana’s former make-up artist Mary Greenwell told the magazine the late princess’ friends were not watching The Crown.
“We all feel the same way,” she said. “I’m not interested in that kind of portrayal of someone who was globally recognised and loved. It’s a cheap way of revealing someone.”
Historian Hugo Vickers writes in the edition about his disdain for the series, accusing the filmmakers of making things up to the detriment of the royal family.
“No-one is happier than me that The Crown has come to an end,” Mr Vickers said.
He says he forensically examined the 50 episodes of the first five series and found numerous mistakes in stories and timelines and pointed them out, such as incorrect claims the late Duke of Edinburgh refused to kneel before Elizabeth II at her coronation.
“What I did not realise was the truth seems to have been of no interest to them at all. They were only interested in drama and they obtained it in many devious ways,” Mr Vickers said.
He added: “If they didn’t like the truth, they made it up, invariably to the detriment of the Royal Family.”
Mr Vickers said The Crown, rather than well-researched biographies and documentaries, had now become the “narrative” and people believe it.
He also accuses the filmmakers of having “had it in for Prince Philip” and says the duke was “deeply hurt” and consulted his lawyer after he was blamed in the series for the death of his sister, Princess Cecile, in a plane crash.
The Crown portrayed Cecile’s decision to fly from Germany to London as a reaction to Philip having problems at school, but in fact she was travelling to the UK for a wedding.
Philip was listening to Radio 4’s Today programme when Mr Vickers was interviewed about the error, with the duke feeling “to some degree the record was corrected”, the historian said.
Mr Vickers praised Claire Foy’s portrayal of a young Elizabeth II, but was critical of Olivia Colman’s constant scowling, and Imelda Staunton for playing the Queen as “dead boring”.
The January issue of Tatler is available via digital download and on newsstands from December 7.