The grand jury said it believes the "real number" of abused children might be "in the thousands" since some records were lost and victims were afraid to come forward. The report said more than 300 clergy committed the abuse over a period of decades, beginning in the mid-1950s.
Pennsylvania attorney general Josh Shapiro said the two-year probe found a systematic cover-up by senior church officials in Pennsylvania and at the Vatican.
"The cover-up was sophisticated. And all the while, shockingly, church leadership kept records of the abuse and the cover-up. These documents, from the dioceses' own 'Secret Archives,' formed the backbone of this investigation," he said.
Significantly, the report faulted Cardinal Donald Wuerl, the former long-time bishop of Pittsburgh who now leads the Washington archdiocese, for what it said was his part in the concealment of clergy sexual abuse.
Mr Wuerl, one of the highest-profile cardinals in the United States, released a statement on Tuesday that said he had "acted with diligence, with concern for the victims and to prevent future acts of abuse".
The grand jury scrutinised abuse allegations in dioceses that minister to more than half the state's 3.2 million Catholics. Its report echoed the findings of many earlier church investigations around the country in its description of widespread sexual abuse by clergy and church officials' concealment of it.
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Most of the victims were boys but girls were abused too, the report said.
"Church officials routinely and purposefully described the abuse as horseplay and wrestling and inappropriate conduct. It was none of those things. It was child sexual abuse, including rape," Mr Shapiro said.
The panel concluded that a succession of Catholic bishops and other diocesan leaders tried to shield the church from bad publicity and financial liability by covering up abuse, failing to report accused clergy to police and discouraging victims from going to law enforcement.
Yet the grand jury's work will not result in justice for the vast majority of those who say they were molested by priests as children.
While the probe yielded charges against two clergymen - including a priest who has since pleaded guilty, and another who allegedly forced his accuser to say confession after each sex assault - the other priests identified as perpetrators are either dead or will avoid arrest because their alleged crimes are too old to prosecute under state law.
"We are sick over all the crimes that will go unpunished and uncompensated," the grand jury said.
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