"I want to thank them for all their dedicated work across this country, the Commonwealth and beyond, and I am particularly proud of how Meghan has so quickly become one of the family", she said.
The decision "shows that the royals can move very swiftly and very ruthlessly", royal historian Robert Lacey previously told PEOPLE.
The couple will no longer use the titles His Royal Highness and Her Royal Highness, but they are not being stripped of them.
Elizabeth, 93, has been managing a family crisis caused by Harry and Meghan's determination to spend most of their time in Canada and to completely alter their relationship with the rest of the royals.
In her statement yesterday she wished them "a happy and peaceful new life".
How this so-called Royal settlement is enforced remains to be seen - there's every likelihood that scrutiny of the Sussexes in North America is even more intense than here in Britain where they were respected, and valued, senior members of the Royal Family.
Jamie Foxx and Tobey Maguire, despite having joined the royal family.
Harry, who has spoken fondly of his time in the Army, will lose several military roles including Captain General of the Royal Marines, Honorary Air Commandant of RAF Honington and Commodore-in-Chief of the Small Ships and Diving, Royal Naval Command.
The Duke and Duchess of Sussex have shared their wish to repay Sovereign Grant expenditure for the refurbishment of Frogmore Cottage, which will remain their United Kingdom family home.
Tom is good friends with Meghan and Harry's pal, George Clooney.
"The fact they are not going to trade on their titles I think will go down very well, the fact they said they wish to pay back the 2.4 million pounds spent on doing up Frogmore Cottage will also go down very well".
Although they will no longer be formal representatives of the queen, the couple will still do what they can to uphold her values. The Palace is, however, yet to determine their need for a publicly-funded security detail.
The new "model" will take effect this spring, though the palace did not announce an official date.