The family of nine-year-old Diamond Marshall said she died peacefully on Monday night.
"We are incredibly saddened, yet relieved, that Diamond is no longer suffering," her family said in a statement Tuesday.
"We are incredibly thankful for the time we had with Diamond and we will cherish the memories we made with her. In her fight against cancer, Diamond was a warrior, but she carried herself with the grace and dignity of a princess."
In July 2011, Diamond was battling Stage 4 undifferentiated sarcoma when she fulfilled her dream of meeting a "real princess."
She had written Kate a note from the hospital bed where the child watched the royal wedding earlier that year, and the Children's Wish Foundation went to work to make it happen.
The meeting came on the windswept tarmac of the Calgary airport at the conclusion of Kate and Prince William's Canadian tour.
Diamond, who had already lost her mother to cancer, wore bright pink shoes and a band with a pink flower around her bald head. She gave a quick hug to Kate and then ran back to her family so quickly that she forgot to hand the bouquet of colourful flowers she was carrying. The duchess called her back, kneeled down and the two shared words.
The photos of the exchange became one of the lasting images of Kate's Canadian tour with Prince William — their first overseas visit as newlyweds.
"She was beautiful," an enthralled Diamond told reporters.
Diamond's dad, Lyall Marshall, would later say he believed the meeting helped his little girl fight the disease.
"That hug had a lot of meaning. We're very thankful for that meet and greet for her and the whole community rallying behind her," Marshall said. "From a father’s point of view, when you can say the whole world is rooting for you to get better, I mean, that’s a lot."
A palace spokesman said Tuesday that the Duke and Duchess of Cambridge were saddened by the news of Diamond's death. The royal couple are currently visiting New York.
In a statement Tuesday, Diamond's family said the resilient girl survived cancer three times and biopsies in 2011 showed her to be in remission.
But in November they learned she had osteosarcoma.
"We were told this would be the last chapter of her journey," they said.
They plan to honour her with a charitable initiative. Details are to be announced in the future.
A charity hockey tournament founded in Diamond's honour issued a statement on its Facebook page.
"Very sad news today," the statement read. "During her short life, her courage was an inspiration to many. We'll miss you, Diamond."
Kyla Martin, a spokeswoman with the Children's Wish Foundation, said Diamond represented the bravery of many children who battle cancer.
"She had a smile in spite of all the challenges that she was facing," Martin told Calgary radio station CFFR. It was that courage that captured international attention during the royal visit, she suggested.
"To be able to watch it live was just inspiring."
Martin said at the Children's Wish gala in May, Diamond and her sister were dressed up as princesses.
"She was running around, she was full of smiles with her sister and playing with the other Wish kids. And that's a memory I will treasure forever."
— By Clare Clancy in Regina.