Some 80,000 patients undergo chemotherapy each year
Doctors are being urged to re-think their approach to giving chemotherapy during care at the end of life.
A review of 600 cancer patients who died within 30 days of treatment found that in more than a quarter of cases it actually hastened or caused death.
The report by the National Confidential Enquiry into Patient Outcome and Death said doctors should consider reducing doses or not using chemotherapy at all.
England's cancer tsar Professor Mike Richards said he was "very concerned".
The group of patients the independent group was looking at represents 2% of the 80,000 people who receive chemotherapy each year.
They were all severely-ill patients for which the chemotherapy was mostly being used to manage their condition rather than in an attempt to cure the cancer.
After examining case notes, the group said that 35% of patients received good care.
But it found that in 27% of cases it hastened or caused death - the toxic nature of the treatment can lead to a range of problems, the most serious of which is an infection called neutropenic sepsis.
Report co-author Dr Diana Mort said doctors should be more "cautious in prescribing chemotherapy for very sick patients".
And she added: "The process of consent may require more than one discussion.
"Patients must be made aware of the risks and side-effect of chemotherapy as well as the potential benefits."
The report also criticised the facilities made available to patients with nearly half being admitted to general medicine wards during the last 30 days of life rather than a specialist cancer unit.
The authors recommended where hospitals did not have specialist units they should put in place transfer arrangements to centres that did.
Professor Jane Maher, chief medical officer at Macmillan Cancer Support, said: "This report provides very disturbing information about the safety of treatment for incurable cancer.
"It shows that doctors and nurses need to be much better at helping patients understand the pros and cons of such powerful treatments in the last year of life."
Professor Richards said he was "very concerned".
"I am asking all chemotherapy service providers to consider these reports urgently and to reassess their own services immediately against the measures we have set nationally."
But Dr Peter Clark, of the Royal College of Physicians, said while lessons could be learnt it was important to remember that chemotherapy carried "substantial short and long-term benefit" for the majority who undergo the treatment.