The palace released a lengthy statement, saying the Nicole Kidman-starrer was "based on erroneous and dubious historical references" that the family didn't want to be associated with, reported Ace Showbiz.
The Olivier Dahan-directed film has been scheduled to open the annual film festival on May 14.
"The Prince's Palace would like to reiterate that this feature cannot under any circumstances be classified as a biopic," a press release sent from the palace read.
"The trailer appears to be a farce and confirms the totally fictional nature of this film. It reinforces the certainty, left after reading the script, that this production, a page of the Principality's history, is based on erroneous and dubious historical references.
Actress turned royal Grace Kelly, who is the main subject in the movie, is the mother of Prince Albert of Monaco.
'Grace of Monaco' is scheduled to open in theatres across Europe over the next few weeks after the Cannes premiere.
It is yet to have a US release date after The Weinstein Co pulled it from the 2014 schedule earlier this year.
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