Britain's Crown Prosecution Service CPS, which got a file on the case at the start of November, has said that immunity did not apply to dependants of consular officials outside of London and Sacoolas would be charged with death by unsafe driving, the BBC reported.
The fatal crash occurred near a U.S. Air Force base in Northamptonshire, England, on August 27.
Charles and Dunn had said that they would meet Sacoolas if she promised to return to the UK.
Britain's Crown Prosecution Service said it had authorised police to charge Sacoolas with causing death by unsafe driving "following a thorough review of the evidence available".
"We will continue to look for options for moving forward", a State Department spokesman said in a statement.
Britain's Foreign Office later said her husband was not a registered diplomat.
Now that the CPS has authorised Northamptonshire Police to charge Mrs Sacoolas, prosecutors have begun extradition proceedings, but there is no guarantee the United States authorities will agree to the process.
The accident happened near a military base in Northamptonshire.
The offence of causing death by risky driving carries a maximum 14 year prison sentence.
Longest UN climate talks end with no deal on carbon markets
One of the key issues that was to be resolved at the summit was how to regulate carbon markets , which would put a price on emitting carbon dioxide.
She later admitted through her lawyers that she was driving on the wrong side of the road when the collision took place.
The row was escalated to the highest level, and discussed by United Kingdom foreign minister Dominic Raab and US Secretary of State Mike Pompeo on several occasions.
Dunn's mother, Charlotte Charles, broke down in tears after finding out charges had been brought, saying it meant she had kept a promise to her son to get him justice.
'We now expect Anne Sacoolas to be treated in the same way as any other person and to be subject to the same legal process as the rest of us would be'.
The teenager's parents, Charlotte Charles and Tim Dunn, went to the U.S.to ask President Donald Trump to intervene in the case.
"There are extradition proceedings under way, and whether the British authorities' decision yesterday was helpful or not to the American government, this case will be dealt under the rule of law, which we know is just as important to Americans as it is to British people".
White House officials were skeptical of having Dunn's parents and Sacoolas in the West Wing at the same time, but Trump was keen on having a "hug and make up moment", a person with knowledge of the discussions said at the time. During their meeting in the White House, the couple rejected Trump's offer to meet Sacoolas, whom he said was in the next room.
"No loss compares to the death of a child and Anne extends her deepest sympathy to Harry Dunn's family".