Harry, the younger son of King Charles, co-founded Sentebale in 2006 to help young people with HIV and AIDS in Lesotho and Botswana. It was set up in honour of his mother Princess Diana, who died in a Paris crash in 1997.
Last week Harry and co-founder Prince Seeiso of Lesotho said in a joint statement that they, along with the board of trustees, were stepping down from the charity because of a dispute with board chair Sophie Chandauka.
Chandauka responded by accusing Harry and the trustees of bullying, misogyny and racism.
Britain's Charity Commission said it had now opened a regulatory compliance case, which allows it to gather evidence and make findings, and to help trustees address any failings, an action short of a formal statutory inquiry.
"The regulator's focus, in line with its statutory remit, will be to determine whether the charity's current and former trustees, including its chair, have fulfilled their duties and responsibilities under charity law," it said in a statement.
Welcoming the move, Harry said in a statement: "We (the former patrons and trustees) fully expect it will unveil the truth that collectively forced us to resign. We remain hopeful this will allow for the charity to be put in the right hands immediately, for the sake of the communities we serve."
Chandauka also welcomed the news, saying she hoped it would provide "comfort that Sentebale and its new Board of Trustees are acting appropriately to demonstrate and ensure good governance and a healthy culture".
The dispute, with its accusations of bullying, racism and misogyny, is particularly painful for Harry who has accused some royal aides and tabloid newspapers in the past of similar behaviour against his American wife Meghan.
It also involves a charity close to his heart because it was founded in tribute to his mother's legacy. Sentebale means "forget-me-not" in the local language of Lesotho.
"What has transpired over the last week has been heartbreaking to witness...," Harry said in his statement.
Harry, who lives in California with Meghan and their two children, stopped working as a member of the British royal family in 2020. He has been involved in charitable causes in Africa for many years and visited Nigeria last year.
