There had been speculation that the couple would include the name of Diana in honour of Prince William's mother.
Charlotte was born on Saturday in the Lindo Wing of London's St Mary's Hospital. The BBC's royal correspondent Peter Hunt said the Queen and other senior royals were told of the baby's name before the announcement was made public.
He said that a Kensington Palace official, when asked about the couple's choice, said: "We'll let the names speak for themselves."
Charlotte, the feminine form of Charles, has a long royal pedigree and became popular in the 18th century when it was the name of George III's queen.
The King bought Buckingham House in 1761 for his wife Queen Charlotte to use as a family home close to St James's Palace - it became known as the Queen's House and is now Buckingham Palace.
Charles is the name of two former Kings and of the Prince of Wales, the princess's grandfather. Charlotte also has a connection on the duchess's side, as the middle name of her sister Pippa Middleton.
The duke and duchess and their daughter have been at home in Kensington Palace since leaving hospital on Saturday evening.
They will remain there before travelling to their country home, Anmer Hall, on the Queen's Sandringham estate in Norfolk.
Earlier in the day gun salutes took place in London to mark the birth. Volleys were fired by soldiers in Hyde Park and the Tower of London to honour the arrival of the new princess. - BBC NEWS