The controversial photograph has been separated from the other exhibits and placed in another room behind a closed door. A notice on the door warns visitors that they may find the work "challenging".
The Tate consulted lawyers before including it in the exhibition, which opens on October 1.
"As with any artwork that contains challenging imagery, Tate has sought legal advice and evaluated the situation," the Telegraph quoted a Tate spokesman as saying. "Tate has taken measures to inform visitors of the nature of the work, providing information outlining the intentions of the artist," he added.
Prince's work is actually a photograph of a photograph, originally taken by Garry Gross, a US photographer, in 1975. It was commissioned by Shields' mother, who intended to turn her daughter into a child star. He describes Shields' appearance in the photograph as "a body with two different sexes, maybe more, and a head that looks like it's got a different birthday".
Children's campaigners reacted with dismay to the exhibition. "Brooke Shields was 10 years old when this picture was taken. She could not have given informed consent to it being used. It must be bordering on child pornography. It is certainly not art," said Michele Elliott, founder of Kidscape.
"If you are using a picture of a naked child to bring people to your exhibition, then you are exploiting that child. It's as if they are using a 10-year-old girl for bait. I find it disturbing and they should be ashamed of themselves. And putting the picture in a room with a warning outside really is a magnet for paedophiles," she added.