The Harry Potter and Educating Rita actress will play a British widow and "a force to be reckoned with" staying in Simla, the summer capital of British India, in the Channel 4 drama.
Henry Lloyd-Hughes, best known for The Inbetweeners, has been cast as Ralph Whelan, the ambitious private secretary to the Viceroy of India, while The Borgias actress Jemima West will play his sister in the 10-part series, Indian Summers.
The drama is set in the foothills of the Himalayas during the summer of 1932, when the British are still clinging on to power.
Channel 4 said: "Set against the sweeping grandeur of the Himalayas and tea plantations of Northern India, the drama tells the rich and explosive story of the decline of the British Empire and the birth of modern India, from both sides of the experience.
"But at the heart of the story lie the implications and ramifications of the tangled web of passions, rivalries and clashes that define the lives of those brought together in this summer, which will change everything."
Walters plays Cynthia, who is "at the heart of Simla's society" and the doyenne of the Royal Club.
Bedlam actor Nikesh Patel, Gandhi actor Roshan Seth and Monsoon Wedding's Lillete Dubey will also star in the series, to be filmed this summer and broadcast on Channel 4 next year.
Indian Summers, which also features Mr Selfridge's Alexander Cobb and Line Of Duty's Craig Parkinson, will premiere with a 90-minute episode that is followed by 60-minute instalments.
Walters, who played Mo Mowlam in 2010 Channel 4 drama Mo, is set to be honoured with a Bafta fellowship at the organisation's TV awards next month.
Indian Summers is a co-production with Masterpiece on PBS in the US.