When the radio host asked: "You could've gotten her, right? You could've nailed her?"
Trump replied: "I think I could have."
While in a different appearance on the show in 2000 he said she was "crazy", but added they were "minor details" and he still would have slept with her without hesitation.
"I think she's magnificent," Trump said. "Lady Di was truly a woman of great beauty."
"Would you have slept with her?" Stern asked.
"Without even hesitation. She had the height, she had the beauty, she had the skin - the whole thing," he said, adding that "she was crazy, but these are minor details."
The show saw him also make outlandish comments about Angelina Jolie, who he said had lips that were too big, as well as Mariah Carey and Cindy Crawford, who he also said he would sleep with.
He also heaped praise on his then girlfriend Melania Knauss, who is now his wife.
However, it is not the first time the leading Republican candidate has been linked to making comments about the mother of Princes William and Harry with claims he even tried to pursue her after the breakdown of her marriage to the Prince of Wales.
Last year, British broadcaster Selina Scott said the billionaire businessman pursued the Princess of Wales to the point of "stalking" in the mistaken belief he "had a shot" with her.
But Scott, 64, who has a long-running feud with Trump, claimed he actually gave Diana "the creeps".
Writing in the Sunday Times, she said: "He bombarded Diana at Kensington Palace with massive bouquets, each worth hundreds of pounds.
"Trump clearly saw Diana as the ultimate trophy wife. As the roses and orchids piled up at her apartment she became increasingly concerned about what she should do. It had begun to feel as if Trump was stalking her.
"When she died in the tragic accident in Paris in 1997 Trump told friends his biggest regret was that they hadn't dated. He said that he always thought he had a chance of romance and would have had a "shot" with her.
However, Trump's spokesman said at the time that they liked each other a lot but nothing ever came of it.