The four-year-old held on to her mother's coat as she met members of the public gathered outside Mary Magdalene Church following the 11am service.
She hugged a woman in a wheelchair and was presented with gifts from members of the public, many of whom queued for hours to catch a glimpse of the young royals.
Prince George also greeted members of the public, although he was described as more "anxious" than his outgoing younger sister.
Karen Anvil, who famously took the picture of the the Sussexes and Cambridges attending the service together last year, gave Princess Charlotte a doll.
She described the Princess as "cheeky" but with "outstanding manners".
"I asked Charlotte if she would like the doll. She came over with her mum. She took the doll, she loved the doll. The manners are outstanding. She's cheeky, a lot of people would say she looks scared, but she didn't.
"When you're a mum you know when you're child is trying to keep a straight face.
However, she described Prince George as "more anxious" than his "cheeky" sister.
"I would say he was more anxious. His manners were perfect."
The Duke of Edinburgh, 98, who was discharged from hospital on Christmas Eve, was at Sandringham but missed his great-grandchildren's first appearance at the service.
Philip, who retired from public duties in 2017, did not attend last year's church service either despite being in good health at the time.
The Duke and Duchess of Sussex were also absent this year, instead opting to spend seven-month-old Archie's first Christmas with the Duchess's mother, Doria Ragland, in Canada.
Others attending the main morning service included Princess Beatrice and her fiance, Edoardo Mapelli Mozzi.