Lord Dannatt is also a trustee of the Royal Armouries and a friend of the prince.
Giving top honors to a royal family member marked a departure for the magazine.
Markle, 37, who became the Duchess of Sussex when she married Britain's Prince Harry in May, topped People's annual list ahead of Hollywood actresses including Cate Blanchett and Sandra Bullock, human rights lawyer Amal Clooney and reality star Kim Kardashian.More news: Packers QB Aaron Rodgers leaves game with leg injury
They have had a busy few weeks since returning from their summer vacation.
On Tuesday, the newly married couple (just over 100 days ago) attended the WellChild Awards, another of Harry's longtime charity patronages, at the Royal Lancaster Hotel.
Prince Harry and Meghan Markle share a kiss at a charity polo event earlier this year.
It was the couple's first public event after enjoying a few weeks out of the public eye.More news: I'll be back coaching soon - Zidane amid Man United links
The 33-year-old Prince and the former Suits actress - who tied the knot at St Geroge's Chapel at Windsor Castle in May - are now focused on their public service, but in the long-term, they both have ambitions to start a family. A few days ago, Prince Harry and Meghan Markle were feeling during a date in London at the Victoria Palace Theatre, where they attended the representation of the musical Hamilton at the sides of Lin-Manuel Miranda.
"The bond between them is very close".
The general led the Army between 2006 and 2009, during which Harry started his first of two tours in Afghanistan in 2007.More news: The Black Ops 4 Blackout Gameplay Trailer Actually Looks Pretty Good