The Joseph Rowntree Foundation studied a "restorative cautions" scheme run by Thames Valley police since 1998.
It said the scheme was significantly more effective than traditional cautions - where offenders are told off by officers - in stopping criminals re-offending.
It had also made a lot of difference to victims, who felt more involved in the process of justice.
Thousands of cases
The system has been used for offences for which the police would normally give a caution rather than prosecute - about a third of all cases which end in a criminal record.
Successful scheme
It involves offenders hearing about the harm their actions have caused victims, either in a meeting or through a statement.
In the scheme's first three years 1,915 meetings took place, and there were another 12,065 cautions where offenders heard victim's statements.
The authors analysed a final sample of 56 young offenders receiving these cautions and found only one in seven went on to be convicted or cautioned for further offences.
Shame
This was half the re-offending rate of about 28% found in similar studies.
The study found the meetings helped offenders understand the effects of their crime, and induced a sense of shame in them.
"
You're showing respect for the person at the same time as you're disapproving of their behaviour
"
Dr Richard Young
Most offenders apologised to the victims, and a third of them entered into written agreements to make some kind of reparation.
However, some offenders said they had felt coerced into apologising, and were left feeling "bad" - which the report said the process was meant to avoid.
Co-author Dr Richard Young told BBC News: "They key principle here is that you're showing respect for the person at the same time as you're disapproving of their behaviour.
"So you're saying to them: 'You ought to feel bad about what you did, but we're still treating you as a good person that's capable of reforming'.
"It's only if you treat people in that fair way that they're likely to listen to what you're saying and take responsibility for what they've done."
The system also helped ease victims' concerns so they could overcome after-effects of the crime, said Dr Young.
Serious crimes
Dr Young said: "One victim of a serious assault told us that he had thought of the offender as an animal, but the conference made him realise the offender was just a normal person, like anyone else.
"Realising that helped him to get on with his life."
Dr Young said his research suggested the scheme would "work very well" with more serious crimes.
He added that the Home Office was currently looking at whether it was an effective way of dealing with more serious adult offences.
"We have some evidence also from Canberra, Australia, that [with] serious violent offences that have gone through this system, offending over the following years has actually been reduced."