Wearing a brown leather jacket over her shoulders, the American actress was seated a few rows behind the British royal who took his place at the opening ceremony alongside US First Lady Melania Trump.
"The Invictus Games are a unique and powerful way to honor those who have sacrificed so much on behalf of their country," Canadian Prime Minister Justin Trudeau said.
Prince Harry and Melania Trump -- dressed in a houndstooth suit -- spoke for a few minutes in the afternoon, posing for photographs before the prince headed to give out the first medals of the Games at the driving challenge competition.
He met hospital staff and young patients before greeting fans and posing for pictures outside.
Fans and the press have been eagerly awaiting the first official public appearance of the prince and Markle since the "Suits" actress, 36, told Vanity Fair the couple are "in love" in an interview published early this month.
According to his schedule, Queen Elizabeth II's grandson plans to stay at Markle's Toronto home for the entire eight days of the Games.
After last year's Games in Orlando, Florida, the third edition of the Games in Toronto brings together more than 550 injured soldiers and veterans from 17 countries.
The first Invictus Games, based on the Paralympic Games, were held in September 2014 in London. They were launched by Prince Harry, who served with the British Army in Afghanistan.
This year's Games are taking place in Canada, which is marking the 150th anniversary of the founding of its confederation and the centenary of the Battle of Vimy Ridge in France during World War I.
American rocker Bruce Springsteen will headline the closing ceremony on September 30, joined by Canada's Bryan Adams and Quebecois artist Coeur de Pirate.
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