The Duke and Duchess of Sussex have announced they will step back as "senior" royals and divide time between UK and North America.
In a statement released by Buckingham Palace, the couple said they plan to "carve out a progressive new role within this institution".
The BBC understands no other royal was consulted before the statement and Buckingham Palace is "disappointed".
The couple said they intended to "work to become financially independent".
Harry is sixth in line to the throne - behind Prince Charles, Prince William and his three children.
In their statement, also posted on their Instagram page, the couple said they made the decision "after many months of reflection and internal discussions".
View this post on Instagram
“After many months of reflection and internal discussions, we have chosen to make a transition this year in starting to carve out a progressive new role within this institution. We intend to step back as ‘senior’ members of the Royal Family and work to become financially independent, while continuing to fully support Her Majesty The Queen. It is with your encouragement, particularly over the last few years, that we feel prepared to make this adjustment. We now plan to balance our time between the United Kingdom and North America, continuing to honour our duty to The Queen, the Commonwealth, and our patronages. This geographic balance will enable us to raise our son with an appreciation for the royal tradition into which he was born, while also providing our family with the space to focus on the next chapter, including the launch of our new charitable entity. We look forward to sharing the full details of this exciting next step in due course, as we continue to collaborate with Her Majesty The Queen, The Prince of Wales, The Duke of Cambridge and all relevant parties. Until then, please accept our deepest thanks for your continued support.” - The Duke and Duchess of Sussex For more information, please visit sussexroyal.com (link in bio) Image © PA
"It is with your encouragement, particularly over the last few years, that we feel prepared to make this adjustment."
They said they plan to balance their time between the UK and North America while "continuing to honour our duty to the Queen, the Commonwealth, and our patronages".
"This geographic balance will enable us to raise our son with an appreciation for the royal tradition into which he was born, while also providing our family with the space to focus on the next chapter, including the launch of our new charitable entity."
Reuters reported Buckingham Palace also issued a statement saying discussions with Harry and Meghan over their future role were at an early stage.
"We understand their desire to take a different approach but these are complicated issues that will take time to work through," the palace reportedly said.
"Discussions with the Duke and Duchess of Sussex are at an early stage."
Over Christmas, the couple took a six-week break from royal duties to spend some time in Canada with their son, Archie, who was born in May.
After returning to the UK on Tuesday, Harry, 35, and Meghan, 38, visited Canada's High Commission in London to thank the country for hosting them and said the warmth and hospitality they received was "unbelievable".
During the visit, Meghan said it was "incredible time" to enjoy the "beauty of Canada".
"To see Archie go 'ah' when you walk by, and just see how stunning it is - so it meant a lot to us."
Former actress Meghan lived and worked in Toronto during her time starring in the popular US legal drama Suits.
Last September, Prince Harry and Meghan publicly revealed their struggles under the media spotlight.
In an ITV documentary, Meghan admitted motherhood was a "struggle" due to intense interest from newspapers.
Prince Harry also responded to reports of a rift between him and his brother William, the Duke of Cambridge, by saying they were on "different paths".
In October, the duchess began legal action against a newspaper over a claim that it unlawfully published one of her private letters.
She accused the Mail on Sunday and its parent company of a campaign of "untrue" stories.