The government-appointed Turkel Commission’s report will form the core of Israel's submission to a UN inquiry into the 31 May incident – which took place aboard the converted cruise ship, the Mavi Marmara, as it led a six-vessel flotilla toward Gaza.
The Turkel Commission said the Gaza blockade was justified given the threat of arms supply to Hamas. Marines who boarded the Mavi Marmara used sound tactics, resorting to live fire when passengers threatened their lives, the 245-page report said.
"Even if the naval blockade ... had been considered not to meet the requirements of international law, individuals or groups do not have the right to take the law into their own hands and breach the blockade," it said.
The findings are unlikely to be welcomed by Turkey, which once had strong relations with Israel, but which has now demanded a formal apology and compensation for the dead and wounded.
Israel set up its own commission of inquiry after rejecting criticism its troops had reacted with excessive force.
It charged the commission with examining the legality of the military action, as well as its blockade on the Gaza Strip, and the actions of the passengers on board the flotilla.
The Gaza blockade was imposed in June 2006 after Gaza militants kidnapped Israeli soldier Gilad Shalit, who is still being held there.
Israeli restrictions on imports and exports were tightened a year later when Hamas seized power in the territory of 1.5 million people, ousting its Fatah rivals.
A second report, set to be released at an unspecified date, will look at the mechanisms that were available for complaints about the raid.
The commission has heard testimony from high-ranking Israeli officials, including Prime Minister Benjamin Netanyahu, Defence Minister Ehud Barak and army chief General Gabi Ashkenazi.
None of the soldiers who actually participated in the raid have been authorised to provide their testimony.