Trooper James Wharton was under the command of the Prince on a training exercise in Canada when he was confronted by six soldiers who threatened to "batter" him.
After the incident he approached Harry and tearfully told him what had happened.
Wharton said: "I couldn’t stop the tears from welling up in my eyes. He said, “Right I’m going to sort this shit out once and for all."
"He climbed out of the tank and I poked my head out of the turret a few moments later to see him having a go," reports the Mail on Sunday.
The situation was resolved and Harry reported to a senior officer to ensure there would be no repeat.
Wharton said: "I will always be grateful to Harry and I will never forget what happened. Until he went over and dealt with everything I was on track for a battering."
The revelation comes in a book, 'Out in the Army', written by Wharton which is being serialised by the Mail on Sunday.
Wharton was the first soldier to appear on the front cover of 'Soldier', the official British Army magazine.
Shadow Defence Secretary Jim Murphy said of the incident: "The whole country will applaud Prince Harry.
"Our Forces should reflect the modern-day Britain they fight so hard to defend," reports the TelehgraphSuggest a correction