Nepal's Human Rights Commission says 37 people killed four years ago by the army were innocent civilians.
There was no evidence that those shot, including a six-month-old baby, in western Kalikot district were Maoist sympathisers, the commission said.
Its report, following a nine-month investigation, came a day after all five commission members resigned.
Nepalese security forces had argued that those killed died in crossfire during attacks by Maoist rebels.
The report called on the government to compensate each of the victim's families and for the soldiers involved to be punished.
On Sunday, members of the country's seven-party alliance accused the commission of incompetence under King Gyanendra's rule and said it wanted to revamp the body.