Trained by Sir Michael Stoute and ridden by Ryan Moore, the four-year-old filly become the first horse owned by a reigning monarch to win the two-and-a-half-mile showpiece.
The 7-2 favourite was challenged strongly inside the final furlong by Simenon and French raider Top Trip, but Estimate stuck her neck out gamely for a famous success
Here you go: Andrew the Duke of York presents Queen Elizabeth II with the Gold Cup after Estimate's victory
United in victory: The Queen and family members cheer on the horse Estimate as it takes Gold Cup glory
Celebration: The Queen pats Estimate's nose after the horse won the race
Royal party: The Queen Elizabeth II, Autumn Phillips and Peter Phillips arrive for Ladies Day
Despite the bookmakers fancying her chances, Stoute had always urged caution, suggesting her form did not entitle her to be favourite and that her position in the betting owed more to who owned her rather than her actual chance.
In the perfect position throughout, Moore tracked last year's winner Colour Vision into the straight before striking for home.
Out in front: Ryan Moore rides Estimate to victory ahead of Simenon in the Gold Cup
Tense finish: Princesses Beatrice and Eugenie get caught up in the moment on Ladies' Day
Showing incredible guts and determination, Estimate won by a neck.
Estimate is bred to win the race being a half-sister to 1999 winner Enzeli.
Moore said: 'We've always had this race in mind, she won well.
'It's fantastic to ride a winner here for the Queen and in the Gold Cup, it's very special.
All smiles: Queen Elizabeth II looks overjoyed as she watches Estimate surge to victory
Stoute said: 'She had to show a lot of courage as she had to beat one and then stave off another.
'He (Moore) always had her in a good position and she switches off so well.
'I really felt it was a seriously tough task for her, I couldn't be confident at all taking on the boys that are proven over this trip and she can be a pain in the backside at times.'
Asked what it meant to train a Gold Cup winner for the Queen, the trainer said: 'It's a great honour and a tremendous thrill. We know how much she loves this game.'
Stoute, who was winning the Gold Cup for the second time in its 207-year history, went on: "It's a huge thrill as I wasn't confident.
'Her preparation had gone well and she was bred to have a big chance of getting the trip but she had to step up from the Sagaro to beat these boys. I was realistic - I try to be that.
'She had to work hard to get the grey horse of Godolphin and then she had a second battle with Willie Mullins' horse. Watching, it was tense and very long.
Party time: Members of the Royal family cheer after the Queen's horse crosses the line
Thumbs up: Moore and Estimate are led away after securing the win at Royal Ascot on Ladies' Day
'It's a special thrill for the Queen.
'She said it gave her great pleasure and she thanked everyone involved.
'Racing is a big recreation for her, and with her breeding programme, it will have been a bigger thrill than if it were a colt.'
Powerhouse: Estimate led on the home straight and held off the competition to secure the win
'We're a little bit disappointed as at the furlong marker I thought maybe (he could win), as Johnny (Murtagh) is in such form, but of course Ryan Moore (won it) on the Queen's filly and she had the greater form.
'It's probably a fantastic result for racing. I would have loved to have won and I'll probably never be in this position again - hopefully one day.
Where to? Two racegoers study the day's racecard as others travel to Ascot by train earlier (below)
'It's a fantastic day and there's a fantastic atmosphere here now.
'We want to take our horse to the Melbourne Cup. I'll start making plans when I get home. It's going to make November a little busy.'
Top Trip's trainer, Francois Doumen, said: 'I would have preferred a diplomatic incident and won the race!
'The winner is magic. Our horse has run well the first time at this distance and he looks like a promising Kasbah Bliss.
In full force: Princess Beatrice (left) and Pixie Lott looked glamorous as they turned up for the races
'We bred the horse with the owners.'
Hell for leather: Moore (right) leads the pack on the home straight as Estimate (below) relaxes afterwards
'He's run a magnificent race and he will follow the same programme as last year.'
Winner: The Queen walks alongside Princess Anne (right) as the pair see to the horse after the race