The young Prince, who was six at the time, was sadly pipped to the post by his classmates as they took part in a sack race at Wetherby School.
But his mother rushed in to save the day, as Diana ditched her shoes to take part in the school's Mothers' Race. Wearing a black camisole with a matching blazer and a midi-length belted pleated skirt, Diana gave it her all as she sprinted off the starting block.
WATCH: Princess Diana saves the day at Prince Harry's sports day
The royal mum-of-two looked all set to be triumphant in her efforts, but came a very close second as she crossed the finishing line. But there were no hard feelings as Diana and her fellow school mums couldn't stop giggling after the race.
It wasn't the first time the Princess had participated in the Mothers' Race at William and Harry's pre-preparatory school, having competed previously in 1989 and 1990.
The royal brothers attended Wetherby School in London before joining Ludgrove School near Wokingham, Berkshire, and then Eton College.
Princess Diana sprinted to the finishing line
Princess Diana was tragically killed in a car crash in Paris in 1997 when William and Harry were aged just 15 and 12 respectively. She would have celebrated her 61st birthday last week.
On the poignant day, both William and Harry released emotional messages in honour of The Diana Award.
The charity, which runs anti-bullying and mentoring programmes, rewards young people who carry out inspiring work. Each year, thousands of young people are nominated by individuals and their communities to highlight these selfless acts.
Prince Harry competing in the sack race
Congratulating this year's winners, William said, in part, in a statement: "Thank you for your compassion, bravery and absolute determination. You truly are the personification of my mother's legacy and I know she would be so proud of you all.
"I believe there's no better way to celebrate her life and work than through recognising incredible people who dedicate so much time and effort to helping those around them."
Harry, meanwhile, took part in a video message, saying: "My mother instilled in me, and in all of us, a drive to speak up and fight for a better world. And now as a husband and a parent, my mother's voice is even stronger in my life."
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