The US prison population has risen eight-fold since 1970, with little impact on crime but at great cost to the taxpayer, researchers say.
The report calls for a major overhaul of the US justice system
There are more than 1.5 million people in US state and federal jails, a report by a Washington-based criminal justice research group, the JFA Institute says.
Inmate numbers are projected to rise by 192,000 in five years, costing $27.5bn (£13.44bn) to build and run jails.
The JFA recommends reducing the number and length of sentences.
The Unlocking America report, which was published on Monday, also advocated changing terms of parole and finding alternatives to prison as part of a major overhaul of the US justice system.
"There is no evidence that keeping people in prison longer makes us any safer," said JFA president James Austin.
The report said that US crime rates, which have been in decline since the 1990s, are about the same as those for 1973.
It says the incarceration rate has soared because sentences have got longer and those who violate parole or probation are more likely to be given prison terms.
The report said that every year hundreds of thousands of Americans are sent to jail "for crimes that pose little if any danger or harm to society".
It cited several examples including a Florida woman's two-year sentence for throwing a cup of coffee at another car in a traffic row.
Its recommendations run counter to the Bush administration's policy of longer, harsher sentences, which the government says has contributed to falling violent crime and murder figures.
The JFA researchers found that women represented the fastest-growing sector of the US prison population.
The report was funded by the Rosenbaum Foundation and the Open Society Institute.