On 8 January 2020, Prince Harry, Duke of Sussex, and Meghan, Duchess of Sussex, announced on Instagram their decision to "step back as 'senior' members" of the British royal family, split their time between the United Kingdom and North America, become financially independent, and only represent the monarchy on a reduced basis. The decision was dubbed Megxit, a portmanteau of the words "Meghan" and "exit" and a play on the term Brexit. The term was adopted globally on mainstream and social media, spawning various Internet memes and "Megxit" merchandising.

The announcement of their decision led to a meeting of the royal family on 13 January, dubbed the "Sandringham Summit" and described as "unprecedented". Queen Elizabeth II issued a rare personal statement on her family, and was praised for her rapid handling of the matter. On 18 January, an agreement was announced whereby the couple, while still valued members, would "no longer be working members of Britain's royal family", and would not use their "Royal Highness" styles.

The outcome was described as a "hard Megxit", as their offer of occasional work for the monarchy was refused. Collins English Dictionary added "Megxit" to its online edition as a top-ten Word of 2020. A twelve-month review period was allowed in case the couple changed their minds. On 19 February 2021, Buckingham Palace confirmed that the Duke and Duchess would relinquish their royal patronages, as they were not returning as working members of the royal family. The couple's announcement of their decision came to signify the break by the couple from the royal family and its protocol, and their plans for independence under their new brand, then tentatively named Sussex Royal. In November 2021, Harry described "Megxit" as a misogynistic term aimed at Meghan.

Megxit is a play on the term 'Brexit' and refers to Prince Harry and his wife Meghan stepping back as members of the British royal family. It derives from Meg(han) + (e)xit; influenced by Brexit, which was the withdrawal of the United Kingdom from the European Union and the European Atomic Energy Community at the end of January 2020. Collins English Dictionary included 'Megxit' as one of their ten "Words of 2020", and listed it in the online edition of their dictionary: Collins told The Times: "It immediately caught on due to its echoes of 'Brexit'". The use of Meghan's name has been taken in some quarters as identifying her as the instigator of the withdrawal.

British tabloid newspaper The Sun is credited with the first headline use of 'Megxit' on 9 January 2020. BBC News commented that "Sussexit" was trending on social media, but it did not reach the level of use as Megxit in mainstream media. Alternative terms appeared but did not catch on to the same degree either. By 15 January, the term had become so widespread that The Times reported: "Megxit turns into a moneyspinner" for merchandisers who had made clothing and souvenirs using the term. The New York Times wrote that the parallels between "Megxit" and "Brexit" were greater than just "clever wordplay", and that the two terms involved the same divisions in British public opinion from "young liberals" (who supported the couple, and who supported staying in the EU), and "older conservatives" (who supported the Queen, and who supported leaving the EU).

On 19 January, in reviewing the final agreement, The Guardian argued that "stepping back" was no longer appropriate, however, the couple had also still not "resigned" nor "abdicated" from the royal family. When reviewing the media reaction to the final agreement, BBC News said "there are no winners as a result of what many of the front pages are calling "Megxit" – the exit of the Duke and Duchess of Sussex as front-line royals". BBC News, and other British news media, called the final agreement a "hard Megxit", in a further word-play on political term, hard Brexit. On 28 January, the term had become sufficiently pervasive, that the Financial Times in their FT Advisor supplement ran a piece for taxation professionals titled, "What if your client wants to do a 'Megxit'?", while Vanity Fair reported on actor Brad Pitt's "Megxit joke", at the 73rd British Academy Film Awards. The outlet had previously reported on an analysis by the social data analytics firm Brandwatch, which concluded that the term "Megxit" had been in use on Twitter since at least the beginning of 2019 and was utilised in negative comments aimed at Meghan. Sky News reported that the term was being used by trolls on the Internet back in April 2019. In November 2021, in a panel at Wired's Re:Wired Conference, Harry stated that "the term Megxit was or is a misogynistic term, and it was created by a troll, amplified by royal correspondents, and it grew and grew and grew into mainstream media. But it began with a troll."

In October 2019, a source close to the couple spoke to People, stating that they could establish a second base in the U.S., Canada or Africa to escape tabloid scrutiny. Immediately after the announcement in January 2020, in which they said they were aiming to become financially independent, journalist Tom Bradby claimed that the Sussexes were told during their six-week Christmas break (which turned into a four-month stay) at Vancouver Island in Canada that they would not be part of a proposed "slimmed down monarchy". Other concerns raised included perceived ongoing hostile treatment by some in the British tabloid press and alleged issues of racism towards Meghan. The Guardian reported that Prince Harry appeared to "lay the blame at the feet of the press". In a March 2021 television interview with Oprah Winfrey, Harry and Meghan said Megxit was caused by them not getting the help they sought from the royal establishment on issues such as refuting false tabloid stories about Meghan and getting her mental health help. Harry also indicated members of his family closest to the royal institution are trapped ― British constitutional scholar Robert Hazell agrees, and argues that the institution requires a very significant loss of human rights from some of its members.

In their 2022 Netflix docuseries Harry & Meghan, Meghan suggested that the couple wanted to move to another country, where they would not be bothered by the Royal Rota. In 2018, they considered moving to New Zealand, followed by another plan to move to South Africa in 2019, the latter of which, despite being approved by the royal family, was "scrapped" according to Harry after details of it were published by The Times in April 2019. By December 2019, Harry and Meghan were in negotiations with his father, Charles, about moving to Canada: "By the time I was speaking to my father from Canada, the family and their people knew that we were trying to find a different way of working for a minimum of two years," suggesting that they had intended to leave even before their wedding.