The Lady Chapel was begun in 1503 and constructed at the expense of Henry VII. It is the last great masterpiece of English medieval architecture. In 1545 John Leland called it "the wonder of the entire world". Unfortunately the names of the master masons who designed it are not known but they were possibly Robert Janyns and William Vertue. The chapel is approached by a flight of stairs and at the entrance are finely wrought bronze gates displaying royal Tudor emblems.

The outstanding feature of the chapel is the spectacular fan-vaulted roof with its carved pendants. Around the walls are 95 statues of saints. Behind the altar is the tomb of Henry VII and his queen Elizabeth of York. The bronze screen around it is by Thomas Ducheman and the gilt bronze effigies and Renaissance tomb were designed by Italian Pietro Torrigiano. James I is also buried in the vault beneath the monument.

In 1725 the chapel was first used for installations of Knights of the Order of the Bath and the heraldic banners of living knights hang above the oak stalls. Beneath the hinged seats of the stalls are beautifully carved misericords.

At the east end is the Royal Air Force chapel. The stained glass window by Hugh Easton depicts the badges of the fighter squadrons that took part in the Battle of Britain in 1940. Above, in the main east window, is stained glass designed by Alan Younger, installed in 2000.

In the north aisle of the chapel is the tomb of Elizabeth I and her half-sister Mary I. In the south aisle are monuments to Mary, Queen of Scots and Lady Margaret Beaufort, mother of Henry VII. Here also is the vault where Charles II, William III and Mary II and Queen Anne lie, although none of them has a monument. George II, the last monarch to be buried at the Abbey, is interred in a vault below the central part of the chapel.

The painting of the Virgin and Child on the altar is by Bartolomeo Vivarini (Venetian School, about 1480). It was presented to the Abbey in 1935.