The matriarch of the Mitchell family was played by Dame Barbara for more than two decades after she joined the long-running soap in 1994 and became its biggest star.
Dame Barbara died in December 2020 aged 83, having been diagnosed with Alzheimer’s disease in 2014.
Winstone, 37, the daughter of actor Ray Winstone and star of 2006 British film Kidulthood, portrayed the soap stalwart in the BBC biopic Babs in 2017.
She said: “I played Barbara before and became quite close with her. It was an amazing milestone for me in my career. I hadn’t quite got to the point where I had finished with her.
“Sadly she passed away and we all lost an amazing icon and a landlord to our nation, but also a very good friend.
“So when this came up – and it did just suddenly come into my life like ‘Oh my God EastEnders, what do I do with that?’
“I have got a background in film and TV but EastEnders is an institution and we have all grown up with it.”
Winstone said she had played many parts of Dame Barbara’s life but not Mitchell and that it had been “niggling away at me for a while”.
She added: “I just felt like this is something I should I do. It will bookend my journey with her.”
The flashback episode will take viewers back to the winter of 1979 with the Mitchells “hit hard by a Britain in economic turmoil” and Peggy struggling to keep things afloat as her marriage to husband Eric is “showing its cracks”.
Winstone said she fell in love with the episode after reading the script because it was a “working class period drama on the BBC”.
She added: “I thought it was just so monumental for what is going on now.
“I loved the parallels in the script with Thatcher on the telly and what’s going on now in the UK. It is scarily similar and it just pulled at my heartstrings.”
The special flashback episode will air on BBC One and BBC iPlayer at 7.30pm on Monday September 5.