Prince George and Princess Charlotte mingled with the crowds as they attended the Royal Family's Christmas Day church service for the first time.
Prince Philip, who was released from hospital on Tuesday, did not attend.
A large crowd gathered to greet the Queen and family members as they attended the service at St Mary Magdalene Church in Sandringham.
Prince Andrew, who stepped back from royal duties last month, kept a low profile at the event.
The 11am service was broadcast live to the hundreds of visitors who had gathered outside the church.
Some had queued from the early hours of the morning in the hope of seeing the Royal Family.
Well-wishers held out flowers and gifts for Princess Charlotte, four, and Prince George, six, who were accompanied by their parents, the Duke and Duchess of Cambridge.
There had been speculation over whether Prince Andrew would join the rest of his family at Sandringham, after controversy over his links with billionaire sex offender Jeffery Epstein saw him sidelined from royal duties.
While most of the family arrived in front of crowds lining the roads, Andrew, accompanied by his brother, arrived earlier at the church and used a different entrance.
His daughters, Princess Beatrice and Princess Eugenie, both attended the main service.
The BBC's royal correspondent Nicholas Witchell said the prince was a "significant absentee" from the main service at 11am.
Our correspondent said: "If he had attended [the main service] a lot of the coverage would have been around him. He has become... something of an embarrassment currently to the Royal Family."
The Queen's attendance at church preceded her Christmas Day message - in which she described 2019 as "quite bumpy".
She said that "positive things" could be achieved when differences were set aside and people came together "in the spirit of friendship and reconciliation".
"As we all look forward to the start of a new decade, it's worth remembering that it is often the small steps, not the giant leaps, that bring about the most lasting change," she said.
The Queen marked the 50th anniversary of the Apollo 11 mission and the 75th anniversary of D-Day, while also looking ahead at causes being championed by younger generations.
"The challenges many people face today may be different to those once faced by my generation, but I have been struck by how new generations have brought a similar sense of purpose to issues such as protecting our environment and our climate," the Queen said.
The Queen's message comes after a year of intense political debate over Brexit, as well as a number of personal events affecting the Royal Family.
As well as the controversy over Prince Andrew, the year has seen the Duke and Duchess of Sussex take legal action against a newspaper and speak of the pressures of parenthood and royal life.
There have also been concerns over the health of Prince Philip, who was involved in a car crash at the beginning of the year.
Prince Phillip returned to Sandringham on Christmas Eve after spending four nights in hospital.
He was taken to King Edward VII's Hospital in London on Friday on the advice of his doctor.
The 98-year-old retired from public life in August 2017 and his last public appearance was at Lady Gabriella Windsor's wedding in May.
The Earl of Wessex and his daughter Lady Louise Windsor also arrived for the Christmas morning church service.
The Duke and Duchess of Sussex did not attend this year's church service as they are in Canada taking a break from royal duties with their son Archie.
Meanwhile, the Duke and Duchess of Cambridge have released a new photograph showing the duke kissing his youngest son, Louis, alongside Prince George and Princess Charlotte.
The picture was posted by Kensington Palace on Twitter with the message: "Merry Christmas to all our followers!"