The former owner of the famous Knightsbridge store, Mohammed al Fayed has been informed of the decision by the current owners.
Mr Al Fayed’s son, Dodi was believed to be in a relationship with Diana when they were both killed in a car crash in Paris in 1997.
When he sold Harrods for a reported £1.5 billion to the Qatari Royal Family in May 2010 he begged them to keep the statue in place.
However, the Evening Standard reports that they have decided to return the memorial to Mr Al Fayed.
The decision follows the announcement by The Duke of Cambridge and Prince Harry on plans to commission a new statue commemorating the Princess in the grounds of Kensington Palace.
Michael Ward, Managing Director at Harrods, said: “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al-Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past twenty years.
"With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr Al-Fayed and for the public to be invited to pay their respects at the palace,” he added.
Mr. Al Fayed erected the bronze monument as a tribute to Diana and Dodi following their deaths.
Called Innocent Victims, it shows the pair with their hands raised towards a seagull.
Another memorial shows photos of Diana and Dodi and a wine glass smudged with her lipstick from her last dinner.