The Top Gear and Take Me Out star, 48, spilled the beans about his boozy night out in his new book My Lifey.
According to McGuinness, he and Harry ended up on the dancefloor together at a party after Soccer Aid five years ago.
The Sun quotes him as saying: “To say we were dancing close was an understatement – our chests were touching.”
“He then proceeded to take my shirt off,” he went on. “So now I’m topless, a bottle of beer in each hand, dancing with Prince Harry.”
The crowd apparently got really into it as he and Harry showed off their moves.
“We finished dancing and while everyone was cheering, we embraced and he gave me a smacker on the lips,” said the star.
McGuinness – who has three children with his wife Christine – also said that Prince Harry told him he was keen to visit the island of Fernando's.
The holiday spot is where couples on McGuinness's dating show Take Me Out used to be sent.
However, Fernando’s is actually fictional, and the TV show couples were really sent to a sun-soaked spot in Puerto de la Cruz in northern Tenerife.
Watch: Paddy McGuinness has blasted Simon Cowell's parenting skills