When officials carried a notice confirming the Queen’s death to the gates and the flag was lowered to half mast, there were tears and many well wishers sang the national anthem.
One onlooker said the Queen is “all we’ve ever known”.
Another compared her to a swan, which are said to die of broken hearts when they lose their mate, because she died so soon after Prince Philip, her husband of 73 years.
Philip died last April aged 99.
He added: “She was such a good leader.”
Royal superfan John Loughrey, 67, wept outside the Palace as he said he “can’t believe” the news and paid tribute to the “inspirational” Queen, whose “duty always came first”.
“I met the Queen twice. I gave flowers to her. I can’t believe it,” he said.
“She was inspirational. She served her duty. Her duty always came first, her family next.”
Mr Loughrey added: “She went downhill after the Duke of Edinburgh died.
“They were like two swans.
“God save the Queen.”
Mr Loughrey said he will camp near the Palace for 10 days as a mark of respect before lighting a candle at Westminster Abbey.
Annette German, 84, from south London, recalled attending the Queen’s coronation in 1953.
Standing outside the Palace almost 70 years later, the retired teacher said: “I was with my grandmother at the coronation and, when I heard the news she was unwell, I thought, ‘I must be there’, and I got on a train and got the news as I was just round the corner.
“I share a birthday with the Queen and I’ve listened to the national anthem every birthday.
“The Queen could not have better dedicated her life to her country.”
Speaking of her shared birthday, Ms German said: “It’s very special. I’ve had that link all my life.”
She added: “I’m so proud to be here tonight. I’m enormously sad but I’m so pleased that she was able to install the new Prime Minister.
“It’s a very, very moving couple of days for our nation and let’s hope divisions can be put to one side.
“She stayed clear of all the arguments and, as far as I can see, she never put a foot wrong.”
Christine Evans, 68, from Shropshire, said she hopes the royal family will be brought closer together in the wake of the Queen’s death, and that Harry and Meghan can heal their alleged rift.
She said: “Obviously it’s a very sad occasion but sometimes it brings people together – and family have got to stay together.”