Kensington Palace tweeted that the baby will be known as: "Her Royal Highness Princess Charlotte of Cambridge."
Bookmakers had said the favourite was 'Alice' after a flurry of last minute bets, knocking 'Charlotte' off the top spot.
Some £1m was wagered on the name of the couple's second child, bookmakers estimated.
Ladbrokes said that since the baby was born punters had placed more bets on the potential name than on the General Election.
Sky's Royal Commentator Alastair Bruce said: "It’s a name that has tremendous history.
"It will always provide a link to the past and opportunity for this young princess to create her own identity as Princess Charlotte.
"I think that is a salute to Her Majesty The Queen."
Ed Miliband tweeted: "Wishing Princess Charlotte Elizabeth Diana a long & happy life. I hope the Duke & Duchess of Cambridge are enjoying her first, special days."
The birth of the Royal princess was marked this afternoon by gun salutes across London.
As Big Ben chimed 2pm, 41 volleys rang out across Hyde Park fired by the King's Troop Royal Horse Artillery, and there was a 62-gun salute at Tower Bridge.
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