Nine people were shot dead at Emanuel African Methodist Episcopal church by a white gun man.
Twenty one year old Dylan Roof has been charged with nine counts of murder and possessing a firearm.
Hundreds of mourners packed another Charleston AME church, Greater St. Luke's, to remember Revd Daniel Lee Simmons, 74, an army veteran who served in Vietnam.
He had served at eight South Carolina churches before he retired in 2013.
"This was a man who served his God and his country and his people," Governor Haley said.
He added that "Emanuel showed us what love was like," talking about the virtues of each of the victims and Christian forgiveness shown by the relatives of those killed.
"People in Charleston took it personally, the country took it personally."
"That Confederate flag will come down."
The suspected racist motives behind the church attack in June has sparked a conversation across the United States (US) about the Confederate flag - a symbol that could be seen to represent the legacy of slavery.
Photos released show Roof posing with the flag on a website alongside a racist post.
Speaking to the congregation Governor Haley said: "That is just the start for South Carolina and for people around the country - seeing what it's like to live in each other's shoes.
"We will act on what has happened and we will never forget the Emanuel Nine."
Revd Daniel Lee Simmons will be buried on Thursday at Fort Jackson National Cemetery near Columbia.
Last Friday President Obama delivered a eulogy at the funeral for Revd Clementa Pinckney who was also killed in the shooting.
More than 5,400 mourners attended.
