The royal couple laid a wreath of red roses at the town's war memorial for the centenary of World War I and marked a minute's silence before moving along ranks of aged veterans lined up with medals pinned to their chests.
William and Kate, who wore a powder-blue Alexander McQueen frock coat with her hair tied back in a ponytail, then took advantage of their first opportunity to meet members of the public since they began a three-week tour of New Zealand and Australia on Monday.
Blenheim resident Vicky King said locals could scarcely believe who was in the town of about 30,000, which lies at the heart of the Marlborough wine-making region, with much of the population turning out to catch a glimpse of the visiting royals.
"It's just so crazy that they came to Blenheim," she said after meeting Kate, describing it as a "surreal" experience.
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"I was really nervous but she's a mum just like me... She was very easy to talk to."
"She said 'Oh my goodness' and giggled -- I said he was sorry he had a cold. The official behind her thought it was really funny," she said, adding: "Alton will be known for sneezing on royalty!"
The couple then met director Peter Jackson at the Omaka Aviation Heritage Centre, which the Oscar-winning filmmaker has spent millions of dollars turning into a world-class museum.
Their guide around the facility was World War II Spitfire pilot Harcourt "Bunty" Bunt, still sprightly at 93, who regaled them with stories of the heroics behind some of the flying exhibits.
"It's perfect. Start her up," he joked.
Prince George, who enjoyed a play session with 10 Kiwi babies yesterday, did not make the trip to Blenheim, instead staying in Wellington where the family have based themselves for their 10-day New Zealand trip.