Diana, who died in 1997, wore the dress for at least two formal public appearances.
Diana wore the dress at a dinner hosted by the mayor of Florence in April 1985, and again to the Vancouver Symphony Orchestra in 1986.
She was first seen wearing it during an official royal tour of Italy with Prince Charles in April 1985 and again when she attended a performance by the Vancouver Symphony Orchestra in May 1986, according to the auction company.
The long-sleeve dress features a black velvet bodice with blue metallic stars and a royal blue ballerina skirt with a sash and bow — a nod to Diana's love of ballet.
"The design is sweet and sophisticated, and the silver metallic paint on the velvet sparkles nicely alongside the embroidery to create a design reminiscent of a night's sky," the auction company said.