The price was shortlisted for Best Dressed Man in London by The London Magazine, much to the astonishment of many.
A party was held at the capital's Serpantine Gallery and a source said Harry's name was met with laughter when it was revealed he was a contender for the award.
A source said: "Before the prize was awarded, the shortlist was announced by style commentator Peter York.
"When Harry's name was read out, the room just erupted in hoots of laughter."
The prince is regularly pictured in baggy jeans, t-shirts and baseball caps.
The eventual winner of the award was designer Carlo Brandelli, while London's best dressed woman was fashion consultant Yasmin Sewell.
TAGS: Europe Prince Harry