Revd Christopher Loveless, from Warnham, was discovered by Sussex Police as they responded to concerns about his welfare on Friday evening.
The 53-year-old is said to have been "struggling with stress" at the time of the incident, according to a statement from the Diocese of Chichester.
He leaves a wife and two children.
Premier understands his wife is also a vicar.
Police are not searching for anyone else in connection with the incident which has been described as non-suspicious.
Bishop of Horsham Mark Sowerby said the diocese would be praying for his wife Natalie and their two children as well as for Mr Loveless, who spent his whole ministry in the diocese.
An Oxford graduate who studied at Lincoln Theological College, he was ordained priest in 1992 and served as vicar of Warnham for 15 years.
Today Bishop Mark paid tribute to the priest as tearful parishioners attended Sunday service.
He said: "I believe that everybody present here today will have heard that your vicar, Mr Loveless, died unexpectedly on Friday evening.
"It is impossible for me to put into words the loss this represents to his family, his parents and all of us.
"Christopher was a talented, experienced parish priest, much-loved in this parish where he has served since 1999.
"His sudden death comes as a profound blow, not only to his family but to many present who loved and admired him and all who benefited from his gentle, pastoral care.
"Within our sadness and grief and shock, let us now make space in our hearts and in our prayers for Christopher's family."
The church was packed with parishioners, some clearly emotional, as they prayed for Revd Loveless.
A book of condolence was opened in the church near bunches of flowers and a photograph of Revd Loveless.
In a statement, Sussex Police said: "The vicar of Warnham, Christopher Loveless, was found hanged.
"We were contacted shortly before 8pm on Friday with a report that a 53-year-old man had gone missing from his home in Warnham.
"Officers searched the area and they found the body of a man at about 9pm in the woods near Tilletts Lane in Warnham.
"The death is not being treated as suspicious. The coroner's officer has been informed."