The monarch, 94, welcomed the Duke and Duchess of Cambridge to Windsor Castle following their royal train tour.
Prince Charles and the Duchess of Cornwall also attended the socially-distanced Christmas carol concert within the castle's grounds.
The Earl and Countess of Wessex and Princess Anne were also there.
It was confirmed last week that the Queen and the Duke of Edinburgh will spend Christmas "quietly" at Windsor, rather than Her Majesty's private estate at Sandringham in Norfolk.
And rather than a gathering of senior royals as is traditional, the Queen and Prince Phillip, 99, will spend the festive period alone after considering "all the appropriate advice", according to Buckingham Palace.
"Like everyone they hope things will get back to normal in 2021," a palace spokesman said at the time.
The Cambridge's trip on the royal train saw them thank key workers, volunteers and communities in Scotland, England and Wales.
While there was veiled criticism from Welsh and Scottish ministers over its timing, Prime Minister Boris Johnson hailed the tour as a "welcome morale boost", No 10 said.
On Tuesday, Prince William and Catherine told students in Cardiff they were still wrestling with their Christmas plans and had yet to decide where or with whom they would be.
The couple have previously spent the festive period with Catherine's parents at their home in Berkshire.
On the final day of their zig-zag three-day tour of Britain, the couple met undergraduates to hear about their mental health challenges during the pandemic in Wales, and they spoke with NHS workers in Reading.
At the end of Tuesday's performance, the Queen, chatted to her family in turn and as she turned to walk up the steps back inside the castle, Prince William said: "Bye gran."
Commissioners Anthony and Gillian Cotterill, territorial leaders for The Salvation Army in the UK and Republic of Ireland, also came forward to speak to the Queen, who told them "nobody's allowed to sing anymore".
Choirs are allowed to perform in the open air and Princess Anne told her mother: "Oh, we can sing outside."
Mr Cotterill said afterwards: "The Queen was saying she was just so happy we were able to play some carols because she thinks this will be the only time she'll be able to hear carols, and she was disappointed we didn't sing. "
"Sometimes we're playing musicians and other times we're a choir. At an event like this, it's better to have the band as you can hear it for miles."
The Salvation Army's Regent Hall Band, based in London's busy Oxford Street, played Hark The Herald Angels Sing and The First Noel for the royal family.
Mrs Cotterill added: "I did see the Queen mouthing some of the words - so that was nice."
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