Her decision is believed to be in response to growing coronavirus case numbers in the UK, which could have a huge impact on Christmas plans for the royals and everyday Brits.
"There is a belief that it is the right thing to do for all concerned," royal sources have been quoted as saying about the Queen's decision.
The Sun reported that the decision was made "with regret" from the Queen, according to royal insiders, but that it would "put too many people's Christmas arrangements at risk if [the lunch] went ahead".
Buckingham Palace declined to comment further because it was a "private family event" rather than a public royal engagement.
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It's understood that the royals hope to go ahead with their annual Christmas pilgrimage to Her Majesty's Sandringham Estate, where they traditionally spend the holiday together and attend church on Christmas Day.
The trip was cancelled last year due to ongoing COVID-19 restrictions in the UK, leaving many royal fans eager to see the royals return this year.
But if the Omicron variant continues to make case numbers surge in the UK, the royals could choose to cancel the visit altogether, or new government restrictions could force the Queen to call it off.
So far Buckingham Palace has made no formal announcements about the annual Sandringham festivities being under threat of cancellation.
Still, it's a sad blow for the Queen to have to call off her pre-Christmas lunch, as this will be her first holiday season without her husband of 73 years, Prince Philip.
The Duke of Edinburgh died in April aged 99, marking the start of a sombre year for the whole royal family.
This article originally appeared on our sister site, Now To Love.