Soldiers were "tired and tense" while operating in an area of Iraq where a Plymouth-based Royal Marine was killed by "friendly fire", an inquest heard.
Marine Maddison was on river patrol on the Al Faw peninsular
Christopher Maddison, originally from Scarborough, died in a river patrol boat on the Al Faw peninsula in 2003.
Lt Col Nicholas Anthony told an Oxfordshire coroner that communications breakdowns during a confusing situation resulted in the boat being fired on.
He said the incident that killed the 24-year-old was "absolutely tragic".
It was initially thought Marine Maddison was killed by the Iraqis the soldiers were looking for.
But months after his death, the Ministry of Defence admitted he had been hit by his own side.
Marine Maddison was travelling in one of two Landing Craft Vehicle/Personnel (LCV/P) accompanied by two inflatable boats.
The unit had been sent out first on March 28, then at night on March 29, to flush out enemy boats thought to be hiding in marshland near Crossing Point Anna, set up for main battle tanks to reach the Al Faw peninsular.
Lt Col Anthony, the commanding officer of Marine Maddison's 539 Assault Squadron, told Oxfordshire assistant deputy coroner Andrew Walker that the landing craft had been hit by a Milan missile fired by British forces.
Marine Maddison died of shrapnel wounds.
Lt Col Anthony said a "communications breakdown" led to soldiers operating the Milan attack missile being told that two enemy vessels were speeding towards them on the Khawr Az Zubayr river in March 2003, when they were in fact British Royal Marines.
He said: "We had been working eight to 10 days, all on fighting operations. We were tired and we were tense, there's no doubt about that.
"I think in the communications set-up we had there was clearly a failing at some point between various locations, but I also think that people were doing their very best at the time in a very, very confusing situation.
"What it turned out to be was absolutely tragic."
The MoD confirmed in December that Marines from 40 and 42 Commando were on either side of the waterway where Marine Maddison's squadron was working.
The hearing continues.