She was joined by the Duke of Edinburgh and the Prince of Wales at the Braemar Gathering in Aberdeenshire, where the royal party watched pipe bands and dancers perform to a large crowd.
The event is held each year a short distance from the royals' summer retreat on the Balmoral estate.
The Queen is patron of the Games and joined thousands of spectators in patchy weather to cheer on participants in the tossing of the caber and tug of war contests. The Queen wore a pale pink coat and matching hat, and as she took her seat in the royal pavilion placed a tartan rug over her lap.
Twelve-year-old triplets Fergus, Fraser and Angus Wood from Braemar presented the Queen with a heather posy.
Secretary of Braemar Royal Highland Society, William Meston, said: "We're very proud of the connection with the royal family.
"It's tremendous, and as secretary I'm proud to welcome them every year. It's great for the whole area."
Held at the Princess Royal and Duke of Fife Memorial Park, the Games take place on the first Saturday of every September and attract visitors from around the world.
Queen Victoria first attended the Braemar Gathering in 1848. Since then it has been regularly visited by the reigning monarch and other members of the Royal Family.
Mr Meston said of the popularity of the event: "I think the traditional nature of the Games helps.
"We've got a great backdrop with the hills and a great crowd.
"People come from all over the world for the Gathering."
Traditionally, the royals attend a church service at nearby Crathie Kirk the day after the Games.
The Queen took up residence at Balmoral Castle at the beginning of August and is expected to stay until October before returning to London.
The visit to the Braemar Gathering came as it emerged a man was arrested over a break-in at Buckingham Palace earlier this week.
Police said the man was found ''in an area currently open to the public during the day'' and arrested for burglary, trespass and criminal damage.
A second man was arrested outside the palace for conspiracy to commit burglary following the incident shortly before 10.30pm on Monday.
The royals seemed relaxed in Braemar and were met on their arrival by Lord Lieutenant of Aberdeenshire James Ingleby and president of the Braemar Royal Highland Society David Geddes.
Spectators stood to sing the national anthem and compere Robbie Shepherd congratulated the Queen on her new role of "doting great-grandmother".
As the contests got under way the Queen smiled and spoke to Charles, pointing towards the arena.
German tourist Hamka Gohr, 44, said she was delighted to have seen the royals on what is her fourth trip to Scotland.
Ms Gohr, who travelled with her sister from Lubeck, said: "We love British culture and especially Scottish culture.
"We love the Queen and the royalty as we don't have that in Germany.
"It has always been our dream to come here to the Highland Games and see the Queen."