The Queen's made her first appearance since announcing that the Duke and Duchess of Sussex are stepping back from the royal family.
She was joined by the Duke of York at St Mary the Virgin church in Hillington near Sandringham for Sunday service.
Wearing a grey houndstooth checked dress and matching coat with a grey hat, the monarch smiled broadly as she arrived.
In a statement issued after royal family talks concluded on Saturday, the Sussexes announced they will stop carrying out royal duties from the spring, no longer use HRH and will repay the taxpayers' millions spent on their Berkshire home.
Harry and Meghan said that under the agreement they understood they were "required" to step back from royal duties.
The Queen said she recognised the "challenges" the couple had faced over the past year, and added: "I want to thank them for all their dedicated work across this country, the Commonwealth and beyond, and am particularly proud of how Meghan has so quickly become one of the family.
Royal fan Rosie Viles, from nearby Hunstanton, came to the church with her six-year-old granddaughter Imogen Viles.
She said the issue of Megxit, as it has been dubbed by the media, would have been "stressful" for the Queen, "but she sorts it all out, always does".
"It's not a surprise what has happened," said Mrs Viles. "It's sad but it's his decision. He perhaps thinks of his mum and doesn't want the pressure for his wife and child. I think that now they've agreed to pay back Frogmore I think a lot of people will appreciate that."
Harry and Meghan said they would like to repay the #2.4 million of taxpayers' money that was spent on refurbishing their grade-II listed home near Windsor.
Well-wisher Alex Wilson, 42, of Kettering, Northamptonshire, stood near to the church with his family.
He said news that the Sussexes were leaving the monarchy must have been "stressful, difficult, upsetting" for the Queen, adding: "She's a great lady."
The announcements from the young royals have raised fresh questions about Andrew's ongoing role in the royal family.
The Duke of York stepped down from royal duties in November following his disastrous Newsnight interview over his relationship with convicted sex offender Jeffrey Epstein.
However, Andrew has so-far kept his HRH title.
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