Prince Charles and Prince William were also left out in the cold.
It has been reported that the couple's dramatic decision was made while they were in Canada – without the knowledge of their family.
The Queen, Charles and William are said to have found out when the news broke on TV and social media – at the same time as the rest of the world.
The Daily Mail reported that a senior royal source claimed the Queen and her family were "deeply disappointed" by the couples' decision.
Another said the royals were "shocked, saddened and downright furious" at Harry and Meghan.
One aide said: "People had bent over backwards for them. They were given the wedding they wanted, the house they wanted, the office they wanted, the money they wanted, the staff they wanted, the tours they wanted and had the backing of their family. What more did they want?"
Another added: "It's deeply unfair to the Queen who doesn't deserve to be treated this way. It is a shoddy way to treat her. The family understands that they want to do something different and is perfectly willing to help them. People are just devastated."
The couple are said to have "secretly plotted" their decision to essentially leave the royal family during their stay in Canada – without the knowledge of their UK-based press team.
"The level of deceit has been staggering and everyone from the top of the royal household to the bottom feels like they have been stabbed in the back," the source said.
It's deeply unfair to the Queen who doesn't deserve to be treated this way. It's a shoddy way to treat her.
After Harry and Meghan's statement was released on Instagram, and their new website went live, Buckingham Palace hurried out a statement.
It read: "Discussions with the Duke and Duchess of Sussex are at an early stage. We understand their desire to take a different approach, but these are complicated issues that will take time to work though."
The couple are now set to divide their time between the UK – where they hope to stay at Frogmore Cottage – and North America.
Meghan's father Thomas Markle has also broken his silence on the news. He said he was "disappointed".
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