He made the comments in a message at the launch of a report by Catholic charity, Aid to the Church in Need.
This report said that religious freedom had deteriorated in 55 of the 196 countries studied in recent months.
Prince Charles said events in Iraq and Syria, where civil war and Islamic State extremists have caused thousands to be displaced, were "heartbreaking".
In Iraq, Christians have been driven out of their ancestral homes and maintain that "crimes against humanity" have been committed against them and Iraq's other minorities - such as the Yazidis.
And in Syria, more than 100,000 Syrians have lost their lives in the escalating conflict between forces loyal to President Bashar al-Assad and those opposed to his rule.
The report claims that across the world, Christians remain the most persecuted religious minority, while Muslim countries predominate among states with the most serious violations of religious freedom.
During his message, the prince spoke of his mounting despair at  the expulsion of Christians, Muslims and Yazidis from places in the Middle East that their ancestors had lived in for centuries.
"The horrendous and heartbreaking events in Iraq and Syria have brought the subject of religious freedom and persecution to the forefront of the world's news," Prince Charles said in his video message to those attending the report's launch.
He added that such incidents were not isolated and found in "some, though not all" of the Middle East, Africa and in many countries across Asia.
"Thankfully, despite this bleak picture, there are inspirational people of different faiths, joining together to overcome division and hatred," he said.
"It is an indescribable tragedy that Christianity is now under such threat in the Middle East, an area where Christians have lived for 2,000 years and across which Islam spread in 700 AD, with people of different faiths living together peaceably for centuries."
The prince said faith leaders had a responsibility to ensure that people within their own traditions respect people of other faiths.
And he called on governments to honour people's rights to practise their faith.
The report's findings said:
The report also says that as Western Europe becomes more diverse, political and social tensions are rising between different faith and cultural groups.
John Pontifex, who compiled the religious freedom report, says all faith communities need to work together to stand up for the right to worship in peace.
"We do not want to be alarmist but we do want to tell the truth in this report about the degree to which minority groups - Yazidis, and indeed of course Christians, are being pushed out of their homelands.
"It is, in effect, a genocide. What more evidence does one need to point to it being a genocide?"
Prince Charles has described threats to Christians in the Middle East as "an indescribable tragedy".