The archbishop, who has recently suffered ill health, looked frail but was smiling as the prince visited the offices of the Desmond and Leah Tutu Legacy Foundation in Cape Town.
The prince tried to usher the archbishop into a chair but he waved him away, announcing "I can stand for a long time!" before eventually taking a seat next to the prince.
The archbishop praised the prince for his charity work in Africa.
He said: "I am very touched by your commitment to Lesotho. I taught at the university there and became Bishop of Lesotho.
"It has always had a very soft spot in our hearts ... just wonderful that you and the English are helping, thank you very much."
The prince replied: "You will have to come and visit one of our projects."
The 84-year-old also talked about the Queen's continued support for the Commonwealth.
The prince, on behalf of his grandmother, then presented the archbishop with the Order of the Companions of Honour, a medal given to people for outstanding achievements in arts, culture and religion.
Previous recipients include Sir John Major, Lucian Freud, Sir David Attenborough and Harold Pinter, but several honours are reserved each year for recipients from Commonwealth countries.
Archbishop Tutu, who became known around the world for speaking out against apartheid and was awarded the Nobel Peace prize in 1984, has been in and out of hospital in recent months suffering from infections related to prostate cancer.
Later, Prince Harry will visit a youth centre helping young people to get out of gangs and stay away from crime.
He will attend a seminar focusing on why teenagers are lured into the gang culture before touring the centre's facilities, which include a small farm, and training workshops.
Prince Harry has already looked at the issue of gangs in the UK by launching the Full Effect programme in Nottingham, which aims to divert young people away from gangs.
His four-day tour is at the request of the UK Government.
Last Thursday, he opened the new Mamohato Children's Centre in Lesotho, run by his Sentebale charity to help children living in extreme poverty.
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