Kensington Palace confirmed that the glittering headpiece had belonged to Princess Margaret, who wore it to the same event – the Diplomatic Reception – 55 years ago in 1958.
The tiara featured a diamond and pearl design with fanned motifs, floating diamond arches, two pearls at the base and a showstopping top pearl in the centre.
It was made from one of Princess Margaret's wedding gifts, a necklace of a Greek key pattern with pendant diamonds and pearls that was given to her by her husband, George VI.
Jewellers Gerrard deconstructed the necklace and created a tiara.
The Queen Mother was known to wear the tiara often, before gifting it to her youngest daughter Margaret.
Margaret also loaned it to Serena Stanhope for her wedding to Margaret's son Viscount Linley.
It is the first time Kate has worn a tiara since her 2011 wedding, largely down to the fact that her and her husband Prince William haven't attended any state banquets, when a tiara is obligatory.
The royal teamed the tiara with a pair of diamond drop earrings and wore her glossy brunette locks in a chic demi-chignon not dissimilar to her wedding day hairstyle.
The new parents arrived in a Bentley. The event is hosted by the Queen and sees the 87-year-old monarch invite the 172 foreign ambassadors based in the capital to her official residence.
Her Majesty meets each member of the London Diplomatic Community at the largest event on the palace's calendar.
Royal commentators have observed that William's attendance at the event is preparing for his future role as King.
The Tuesday evening event is just one of the many engagements William and Kate have scheduled this week.
On Thursday night they will attend the royal premiere of Mandela: Long Walk to Freedom in London's Leicester Square.
On Friday Prince William will present medals Irish Guard soldiers in Aldershot while Kate visits youngsters at Shooting Star House Children's Hospice in Hampton.
Sunday will see William attend the British Military Tournament at Earls Court Exhibition Centre.
The event will raise funds for the three national charities of the National Armed Forces: ABF The Soldiers’ Charity, The Royal Navy & Royal Marines Charity and The Royal Air Force Benevolent Fund.
On Thursday 11 December the Duke and Duchess will attend the screening of David Attenborough's Natural History Museum Alive 3D.
The couple will meet Sir David Attenborough and other attendees before watching the film which is due to be broadcast on Sky next year.