The Duke of Sussex was called a race traitor and pictured with a gun to his head in an image posted online by an extremist teenager.
The image of Prince Harry, against a blood-spattered background, which featured a swastika, was shared on a far-right social media platform last year.
Michal Szewczuk, who is being sentenced for two counts of encouraging terrorism and five counts of possession of terrorist material, had searched Meghan Markle, Prince Harry and pointing gun, before creating the image and sharing it in August.
It included the phrase See Ya Later Race Traitor.
The 19-year-old, of Wyther Park in Bramley, Leeds, sipped water and gave no reaction in the dock at the Old Bailey, while quotes from his blog which justified the rape of women and children to further an Aryan race were read aloud to the court.
He is being sentenced alongside Oskar Dunn-Koczorowski, 18, for encouraging terrorism by posting images or links to Gab, a social media platform which attracts mainly far-right users, last summer.
Dunn-Koczorowski, whose posts included support for far-right terrorist Anders Breivik and the threat of ethnic cleansing of Albanians, demonstrated a highly radicalised and violent mindset, the court heard.
Prosecutor Naomi Parsons said the posts, which were made across three accounts by the two teenagers convey a message of the threat of and/or use of serious violence against others, in order to advance a political, ideological and racial cause (neo-Nazism) and in this way encourage terrorism.