The Queen praised the strong ties between the UK and Slovenia
The Queen has thanked Slovenia for the support the nation has given to British troops in Afghanistan and Iraq.
She spoke while at a state banquet, held in her honour, at the 16th century Brdo Castle near the capital Ljubljana.
The Queen and the Duke of Edinburgh are on a two-day state visit to the country at the behest of president Danilo Turk.
It is the first time they have been to Slovenia since its independence from the former Yugoslavia in 1991 and entry into the European Union in 2004.
Speaking to an audience of 80 guest, the monarch congratulated Slovenia, one of Europe's youngest countries, on its transformation since independence.
She said: "This achievement has been all the more striking when we recall that it is only 17 years since you first emerged as an independent European nation.
"Slovenia's transformation since 1991 is a remarkable tribute to the country's energy, vision and determination."
She highlighted the strong relationship between the country and the UK and paid tribute to Slovenia's humanitarian and peacekeeping efforts.
She said: "The United Kingdom is proud to be working alongside our Slovenian allies in Kosovo, Iraq and Afghanistan."
The Queen wore a full-length silver and gold dress made from material given to her more than 20 years ago while on a visit to the Middle East.
Foreign secretary David Miliband and his wife Louise were among those who heard her speak before dining on a five course meal which included sea bass and lamb.
The trip to Slovenia was organised to celebrate the country's achievements during its short history.
The Queen was presented with a bunch of cream roses by two primary school children when she disembarked from the Royal flight.
She was then greeted by President Turk and his wife Barbara Miklic in public at the same castle, before they retired for a private 20-minute long meeting.
Following their discussion, the couples exchanged gifts between the two nations in a show of friendship.
The Queen was presented with a unique gold leaf tea set with a decoration inspired by London's Big Ben and the carnation - the Slovenian national flower.
Foreign secretary David Miliband was also at the banquet
"That's a teapot," said the prince, and added that it looked "very different" to those he was accustomed to but the Queen told Mr Turk: "Well, I think that is very kind."
The prince was given a book on heraldic insignia and devices while Mr Turk and his wife were given gifts including a book of Holbein drawings from the Windsor archive and a silver trinket box.
The president was also presented with the insignia of a Knight Grand Cross of the Order of the Bath.
Afterwards, the Queen watched a musical performance by children from the British International School in Ljubljana.
Later, she is due to tour a stud farm for Slovenia's Lipizzaner horses, the breed used by the Spanish Riding School in Vienna.
There, the monarch will be presented with a white stallion.
The royals then plan to travel to Slovakia to meet President Ivan Gasparovic.
In the Slovakian capital Bratislava, the couple will attend a ceremonial reception organised by British ambassador Michael Roberts.
Prince Philip will take part in a discussion on climate change organised by the British Council in Slovakia and the Queen is expected to attend an ice-hockey match between local team Poprad and UK side Guildford.