It also blamed cultural conventions and a reluctance to question authority.
Analysis
By Mariko OiBBC News, Tokyo
While the report is highly critical of all the key parties, it digs even deeper. The panel called the disaster "Made in Japan", because the mindset that allowed the accident to happen can be found across the country.
It flagged up the bureaucracy's role in both promoting and regulating the nuclear industry, and also cultural factors such as a traditional reluctance to question authority.
The report was expected to use strong language, but not many thought it would be this harsh.
The panel also found that there was a possibility that the plant was damaged by the earthquake, contradicting the official position that only the tsunami contributed to the disaster.
It could put further pressure on the government, which recently authorised the restart of two nuclear reactors in western Japan. They were declared safe in April but the plant also sits on top of a fault line.