The Prince of Wales and his granddaughter Lilibet had a "very emotional" first meeting during the Platinum Jubilee, a royal source said.
Prince Charles was "absolutely thrilled" by the Duke and Duchess of Sussex's visit with their daughter and son Archie, the source added.
Prince Harry, who quit as a working royal in 2020, said last year he had felt "let down" by his father.
At one stage, his father stopped taking his calls, the duke told Oprah Winfrey.
The Sussexes' interview with Oprah sparked controversy, after they accused an unnamed royal of racist remarks towards their son before his birth and said the wider institution failed to support Meghan when she had suicidal thoughts.
The royal source said that the family's first trip to the UK together since they moved away in 2020 had been "wonderful".
"It was fantastic to see them. It was wonderful to have them back in Britain," the source said.
"The prince and the duchess were absolutely thrilled to see them."
He said it was also "very, very special" for Prince Charles to spend time with his grandson, Archie, now aged three.
The source added: "He hadn't met Lili, his granddaughter, and so to meet her was very emotional, a very, very wonderful thing."
Lilibet celebrated her first birthday on the family's trip to the UK from California, where it would have also been the first opportunity for the Queen to meet her great-granddaughter and namesake, for the first time.
Harry and Meghan attended a thanksgiving service at St Paul's Cathedral during the Jubilee, where they sat apart from Prince Charles and the Duke and Duchess of Cambridge. They did not take part in any other public celebrations.
Speaking at a briefing on Clarence House's annual review, the royal source congratulated the Sussexes on their financial independence.
"Great credit to them. They said they wanted to transition to financial independence and that has now been achieved," the source said.
In the Oprah interview, Prince Harry said his family "cut me off financially" in 2020, with Clarence House saying Prince Charles provided support until the summer that year.
Harry and Meghan secured multi-million pound deals with Netflix and Spotify after moving to the US, although their first productions have yet to be released.
With the Sussexes no longer listed in the accounts, Charles's bill for the activities of his sons and their families has dropped by £1.2m over two years.
It was not revealed what proportion of this is related to Prince Harry and Meghan.
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