The actress, who also stars in Gus Van Sant's 'Sea of Trees' opposite Matthew McConaughey, will play Evelyn, leader of the Factionless in the futuristic franchise.
The film is based on Veronica Roth's YA novel 'Allegiant, the last book in the trilogy, said the Hollywood Reporter.
'Insurgent', which began shooting last week in Atlanta, has a star-studded cast in Shailene Woodley, Theo James, Ansel Elgort, Kate Winslet and Miles Teller.
Watts and Octavia Spencer are new additions to the cast.
Robert Schwentke has replaced Neil Burger as the director.
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