The investigation, led by South African judge Richard Goldstone, found evidence "indicating serious violations of international human rights and humanitarian law were committed by Israel during the Gaza conflict", a UN statement said.
Israel also "committed actions amounting to war crimes, and possibly crimes against humanity".
The Israeli operations, the document states, "were carefully planned in all their phases as a deliberately disproportionate attack designed to punish, humiliate and terrorise a civilian population".
The report accuses Israel of imposing "a blockade which amounted to collective punishment" in the lead-up to the conflict.
It says "the Israeli military operation was directed at the people of Gaza as a whole".
Tim Franks, BBC News, Jerusalem
If this report is to matter, it will be for a number of reasons. One is its length. There have been a slew of reports into the war in Gaza. This is the lengthiest, weighing in at 575 pages.
There is the man who wrote it: Richard Goldstone is a judge and judicial investigator with an impressive record. The UN Human Rights Council, for whom he wrote this, is also no longer a body which is quite as easy for Israel to dismiss as a congenitally biased. The US has recently run for, and been elected to a seat on its council.
Mr Goldstone has also shown a measure of political astuteness. This is not the first time that Israel, or Palestinian militants, have been accused of war crimes - and in Israel's case, crimes against humanity as well. But previous allegations have quickly begun to moulder on the shelf.
Mr Goldstone recommended that the Security Council require Israel, and the Gaza authorities, to report in six months about its own investigations into the alleged crimes. If they did not come up to scratch, then the International Criminal Court should become involved. Who, said Judge Goldstone, could object to that?
The report says Israel must be held accountable for its actions during the war, a process which could lead to the conflict being referred to the International Criminal Court.
The report found there was also evidence that Palestinian groups had committed war crimes, and possibly crimes against humanity, in their repeated rocket and mortars attacks on Israel.
It says the launching of rockets which "cannot be aimed with precision at military targets" breaches the fundamental principle of sparing civilian lives.
"Where there is no intended military target and the rockets and mortars are launched into civilian areas, they constitute a deliberate attack against the civilian population," it said.
It also calls for the immediate release of Gilad Shalit, the Israeli soldier seized in a Palestinian raid in 2006 and taken to Gaza.
Both the Israeli and Palestinian authorities are criticised for the treatment of their own civilians during the conflict.
Israel's interrogation of political activists and repression of criticism of its activities had "contributed significantly to a political climate in which dissent was not tolerated", it said.
Meanwhile, the alleged "arbitrary arrests" and "extra-judicial executions" of Palestinians by the authorities in both Gaza and the West Bank were also criticised.
Israeli government spokesman Mark Regev told the BBC the report had been "born in sin" and had no mandate for its investigation.
The authorities in Gaza and the West Bank did co-operate with the UN mission, but Hamas, which controls the Gaza Strip, has also dismissed the report as "political, unbalanced and dishonest".
Israel said the conflict was to end rockets attacks from Gaza
Ismael Radwan, a senior Hamas official in Gaza, was quoted by AFP news agency as saying it "puts on the same level those who perpetrate crimes and those who resist".
Mr Goldstone rejected such allegations, and told the BBC that "fair minded people" should read the report and "at the end of it, point out where it failed to be objective or even-handed".
The 574-page document recommends that authorities in both Israel and Gaza be required to investigate the allegations and report to the UN Security Council within six months.
The Israeli military insists troops acted lawfully during the conflict.
The government says it has carried out more than 100 investigations into allegations of abuses by its forces - most were dismissed as "baseless" but 23 criminal investigations are still pending.
It reiterated that it was "committed to acting fully in accordance with international law and to examining any allegations of wrongdoing by its forces".
The full report - which is based on 188 interviews, more than 10,000 pages of documentation and 1,200 photographs and other material - will be presented to the UN Human Rights Council at the end of this month.
Eight months after the conflict, very little reconstruction has taken place in Gaza because of the strict Israeli-imposed blockade which bans all but essential supplies from entering the enclave.
The stated aim of the blockade is to weaken Hamas's leadership but aid agencies say it serves only to punish the civilian population.
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