The Queen has described Princess Diana as a "remarkable human being" as she unveiled a fountain commemorating her daughter-in-law at a London ceremony.
Two rings of flowing water are supposed to reflect Diana's life
She acknowledged the "difficult times" in Diana's life but said "memories mellow with the passing of the years".
Diana's brother Earl Spencer, her ex-husband Prince Charles, and sons William and Harry also attended.
The Hyde Park fountain, designed by US architect Kathryn Gustafson, cost £3.6m and is based on an oval stone ring.
The event brought Diana's two families - the Windsors and the Spencers - together publicly for the first time since the princess's funeral in 1997.
Before the formal speeches and the unveiling of a plaque, Prince Charles and his sons chatted and joked with Earl Spencer.
The earl told reporters: "I can honestly say
the rift thing has been very much overplayed."
Officially opening the fountain, the Queen said: "By any standards, Diana's tragic death held the attention of the world.
"Central to this remains the extraordinary effect Diana had on those around her."
She paid tribute to her "wider legacy" and her ability "not only to touch
people's lives but to change them".
Culture Secretary Tessa Jowell accompanied the Queen for a closer inspection of the 700-tonne memorial.
And the 200 people who travelled from across the UK were rewarded when the royals did a "walkabout" and met many of those who made the journey.
Angela Bentham, 38, from Goldthorpe, South Yorkshire, said the Queen told her: "It's nice to see people coming in
to support Diana."
The design consists of a large Cornish granite ring with water pouring on to it, flowing in two directions at different speeds, and is supposed to sit "like a necklace" around the contours of the site.
The centre of the oval, which measures 210m in circumference, may be used as a children's play area.
Work begins June 2003
Opened on schedule July 2004
Cost - £3.6m
Size - 80m x 50m
545 stones of De Lank granite from a Cornish quarry, cut in the Mountains of Mourne, Co Down.
Diana had been married to Prince Charles for 15 years before they divorced in 1996. She died in a car crash in Paris in August 1997.
Dodi Al Fayed, son of Harrods owner Mohamed, was also killed in the crash.
The Windsors and Spencers fell out shortly after her death, BBC royal correspondent Nicholas Witchell said.
Hostility flared up after Earl Spencer made a speech at the princess's funeral criticising the royal family.
Bad feeling between the two families has grown "ever deeper" in the years since, according to our correspondent.
The early stages of the project, set up in 1999, were mired in delays and controversy.
The Princess Diana Memorial Fountain Committee, led by the princess's friend Rosa Monckton, finally picked two competing designs from an initial 10,000 in 2002.
After a vote, Gustafson's design was selected over a reportedly more avant-garde proposal by Bombay-born British artist Anish Kapoor.
Diana's late mother Frances Shand Kydd criticised the chosen memorial as having a "lack of grandeur".
But Ms Gustafson said she wanted the fountain, built to the south of the Serpentine, to be accessible and to reflect Diana's "inclusive" personality.
Ms Gustafson told BBC News Online: "Above all I hope that it provides a fitting memorial for the princess and does credit to the amazing person that she was."
William Weston, chief executive of the Royal Parks, described the fountain as "a contemporary structure in a classical landscape".
DIANA, PRINCESS OF WALES MEMORIAL FOUNTAIN
1 Water enters fountain at highest point, pumped at 100 litres/second.
2 Water travelling east bounces down steps.
3 A specially sculpted channel makes the water rock gently.
4 Water picks up momentum and is invigorated by jets.
5 Water flowing westwards resembles a babbling brook.
6 Air bubbles are introduced as it approaches a waterfall before entering a water feature created by its flow over carved stone.
7 Final destination is the reflecting pool, where water from east and west meet before being pumped out to restart cycle.