Principal as an adjective means ‘most important’:
The principal reason for the failure to take action was poor communication between government departments. (the most important reason)
We can use principal as a noun to mean the head of a school or college (especially in American English):
The college principal made a speech congratulating all the students who were graduating in that year.
Principle is a noun. It means ‘a rule or theory which explains how something is or works’ or ‘a moral rule or guideline’:
The scientific principles behind even the most complicated computer are relatively simple.
He seems to have no principles at all, and is only interested in money. (He has no moral rules or guidelines.)