The Commission of Investigation into the Diocese of Cloyne investigated how allegations against 19 priests were dealt with between 1996 and 2009.
The report said Bishop of Cloyne John Magee could not avoid "responsibility by blaming subordinates".
The Catholic Church has apologised following the report.
The leader of Ireland's Catholics, Cardinal Sean Brady, said it was another "dark day in the history of the response of church leaders to the cry of children abused by church personnel".
"The findings of this report confirm that grave errors of judgement were made and serious failures of leadership occurred," he said
"This is deplorable and totally unacceptable."
Bishop Magee was one of the priests identified by the commission.
The Cloyne report, which runs to 400 pages, said there were concerns about Bishop Magee's interaction with a 17-year-old boy.
"The commission regrets that it has not been possible to report the case involving concerns about Bishop Magee without identifying him," the report said.
"Concerns were expressed about his interaction with a 17-year-old boy."
It said the teenager, who had been contemplating joining the priesthood, was concerned that "the behaviour of the bishop towards him, which had not perturbed him at the time, was, on reflection, disquieting".
However, the report said it was satisfied that this case had been dealt with appropriately.
The Newry-born Bishop Magee stepped aside in 2009 after an earlier report criticised his handling of abuse allegations.
The Cloyne report, which was published by Justice Minister Alan Shatter and Children's Minister Frances Fitzgerald, said the response of the diocese to allegations of child sexual abuse for the period of 1996 to 2008 was "inadequate and inappropriate".
It said it was a "remarkable fact" that Bishop Magee had taken "little or no active interest" in the management of clerical sexual abuse cases until 2008. This was 12 years after the rules on how to deal with such matters were implemented by the church.
It added that Bishop Magee had to "a certain extent, detached himself from the day to day management of child sexual abuse cases".
"Bishop Magee was head of the diocese and cannot avoid his responsibility by blaming subordinates whom he wholly failed to supervise," the report said.
ComplaintsThe commission said it was aware of some 40 people who may have been affected by clerical abuse in the diocese.
All but two complaints came from people who were adults at the time the complaint was made.
The report said between 1995 and 2005 there were 15 complaints against clergy in the diocese which should have been reported.
The most serious lapse was the failure to report the two cases in which the alleged victims were minors at the time the complaint was made.
It also said there was no communication with a neighbouring diocese when a priest who had retired because of complaints went to live there.
However, there was no case in which the diocese moved priests against whom allegations had been made.
A number of priests whom allegations were made against were "retired".
The inquiry was set up by the Irish government in January 2009 following a report published the previous month.
It was conducted by the National Board for Safeguarding Children (NBSC) - a body set up by the Catholic Church to oversee child protection policies.
It found child protection practices in the diocese were "inadequate and in some respects dangerous".
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