Major Hugh Lindsay, former equerry to the Queen, was sent plunging 400m down the mountainside when the avalanche hit the royal party as they were ski-ing off piste above the resort of Klosters.
Another member of the royal party, Patti Palmer-Tomkinson, suffered serious leg injuries in the accident.
The Prince and several other members of the group, including their guide, were able to ski to safety.
As soon as the danger had passed, Prince Charles, the guide and a Swiss police officer, who was ski-ing with the party, raced back to help the victims, digging with their bare hands in the snow to reach them.
Mrs Palmer-Tomkinson and Major Lindsay were flown to the local hospital at Davos, where the Major was declared dead.
Major Lindsay's wife, Sarah, who works in the Buckingham Palace press office was informed of her husband's death. She is six months pregnant.
One eye-witness, Marie Griffiths, said she saw the Prince being airlifted off the mountain.
She said: "As far as I know he hadn't been injured. He looked very distressed, somebody said he was crying, but he did walk to the helicopter so he looked uninjured."
After the accident, the Prince and the remainder of the royal party returned to the chalet where they had been staying. The Princess of Wales and Duchess of York had spent the afternoon there.
The Royal group is cutting short its holiday and will fly home tomorrow.
Prince Charles and his friends were ski-ing on the Wang run, known as one of the most difficult runs in the area. Today was the first time it had been open this season.
The Prince is a very experienced skier and the group had with them one of the best local guides, Bruno Sprecher.
The Queen was told of the accident during a visit to the Queen's tennis club in London where she was attending the centenary celebrations of the Lawn Tennis Association.
Major Lindsay had accompanied the Queen on many official engagements and was said to be a great favourite of hers. She has sent a private message of sympathy to his widow.
The Prince issued a statement in which he confirmed the party had been ski-ing off piste at their own risk.
He praised the actions of their guide, Bruno Sprecher. He said Mr Sprecher had helped save the life of Mrs Palmer-Tomkinson by giving her mouth-to-mouth resuscitation. Unfortunately Major Lindsay had been killed outright.
The Prince first learned to ski at the age of 14. Since then he has taken regular ski-ing holidays - mostly at Klosters. In recent years, he has returned there with his sons Princes William and Harry.
In 2002, the Prince cut short a trip to Klosters following the death of the Queen Mother.