Vaughan received an Officer of the Order of the British Empire (OBE) medal as did England coach Duncan Fletcher, chairman of selectors David Graveney and team manager Phil Neale.
The other 11 England players who took the field during the five-Test series, including star all-rounder Andrew Flintoff and batsman Kevin Pietersen, were made Members of the Order of the British Empire (MBE), the first rung on the ladder of the honours system.
"This is so special to come to the palace, meeting the queen here and being here with all the rest of the boys," Vaughan said on Thursday.
"She was saying she watched the series avidly - but not all the time, because it all got too tense for her and was a bit nerve-wracking."
Flintoff said he'd broken the ice by talking about horse racing with the Queen, well-known for her love of the sport of Kings.
"We just had a chat - I told her I went to the races yesterday," he said. "I didn't know what to expect beforehand - but this is a little bit of history."
England women's captain Clare Connor also received the OBE after leading her team to victory in its Test series with Australia.
The ceremony took place barely two miles from The Oval cricket ground in south London where Pietersen's maiden Test century secured the draw that ensured England's 2-1 series victory - their first Ashes triumph since 1986/87 when Mike Gatting's men won in Australia.
Pietersen, seemingly in recognition of the fact he was meeting the Queen, Australia's as well as Britain's monarch, abandoned his trademark 'skunk' hairtsyle for a more sober, dark style.
England have so far been unable to maintain their Ashes-winning form.
Their subsequent series in Pakistan ended in a 2-0 defeat and this Sunday they are due to fly to India for the second leg of their northern winter programme.
England will, initially at least, be without Ashley Giles because the hip injury, which forced the left-arm spinner home early from Pakistan for surgery, is still troubling the Warwickshire bowler.
But paceman Simon Jones, who missed the tour of Pakistan with the same ankle injury problem, which prevented him from playing at The Oval - and gave Durham all-rounder Paul Collingwood his solitary Ashes Test - is fit to join up with the squad in India.
Meanwhile it was a day of double celebration for Marcus Trescothick, the England opening batsman, who also announced he'd signed a new contract with Somerset, the only county side he has represented during his career.
Being centrally contracted by England means Trescothick now rarely turns out for the west country club but the 30-year-old left-hander's new deal means he will play for Somerset for at least three years after he retires from international cricket.
England vice-captain Trescothick told the Somerset County Cricket website: "I have always been very happy playing cricket for Somerset. It has always been my home and it is where I want to be.
"As long as I am fit and able enough to play cricket, it will be here with Somerset".
England have a busy schedule ahead of the 2007 World Cup in the Caribbean.
After their tour of India, which also includes a one-day series, they have home Test and limited overs encounters against Sri Lanka and Pakistan before defending the Ashes in Australia.