The brothers, whose falling-out has been the subject of intense media scrutiny, looked relaxed together as they revealed the statue they commissioned in honour of Diana in the Sunken Garden of Kensington Palace in central London, her former home.
The bronze statue depicts Diana, who was killed in a Paris car crash in 1997, surrounded by three children, which Kensington Palace said represented "the universality and generational impact" of her work.
"Today, on what would have been our mother's 60th birthday, we remember her love, strength and character - qualities that made her a force for good around the world, changing countless lives for the better," the brothers said in a statement.
"Every day, we wish she were still with us, and our hope is that this statue will be seen forever as a symbol of her life and her legacy."
William and Harry were joined by their mother's brother Charles Spencer and her sisters Sarah McCorquodale and Jane Fellowes for the small, private event at the Sunken Garden, one of Diana's favourite places.
The statue, which is blueish green in colour and designed by sculptor Ian Rank-Broadley, whose effigy of Queen Elizabeth has been used on British and Commonwealth coins, was commissioned by the princes in 2017 as a tribute to their mother.
William's office said they wanted it to reflect her positive impact in Britain and globally, and to help future generations understand "the significance of her place in history".
Beneath the statue is a plinth bearing Diana's name and the date of the unveiling, while in front lies a paving stone engraved with an extract inspired by the poem "The Measure of A Man".
William was 15 and Harry 12 when the limousine carrying their mother and her lover Dodi al-Fayed crashed in a tunnel in Paris as it sped away from chasing photographers.
Both brothers have spoken of the deep trauma her death caused, and how it affected their mental health for years afterwards. Almost a quarter of a century since the fatal crash, Diana remains a captivating figure for many.
Footage from the unveiling ceremony showed William and Harry talking together, with no sign of the rows that have so clouded their relationship in recent years that the once close siblings now barely speak to each other.
Since giving up royal duties last year, Harry has launched some barbed attacks on his family and the royal institutions, including an accusation of racism that he and his wife Meghan made in an interview with US chat show host Oprah Winfrey. Media reports have said the claim infuriated William.
The brothers last saw each other in April at the funeral of their grandfather Prince Philip, the queen's husband of more than 70 years, after which they are reported to have argued.