The report, ‘Choice and prejudice: discrimination against Muslims in Europe’, was particularly critical of countries that have brought in outright bans on face-covering veils or on the wearing of religious symbols in schools.
Focusing on France, Belgium, the Netherlands, Spain, and Switzerland, Amnesty urged European governments to do more to challenge negative stereotypes and prejudices against Islam.
The report argues that legislation prohibiting discrimination in employment has not been properly implemented in Belgium, France and the Netherlands.
Employers had been allowed to ban religious or cultural symbols on the grounds that they would annoy clients or colleagues, or that it conflicts with a company's corporate image or supposed neutrality, it said.
Amnesty said this was in direct conflict with European Union law.
The report comes two days after the anti-immigrant National Front achieved a record score for the party in the first round of France's presidential election, with 18 per cent of voters backing leader Marine Le Pen.
In the last decade school pupils have been banned from wearing headscarves or other traditional religious dress in countries including Spain, France, Belgium, Switzerland and the Netherlands, Amnesty said.
The group also criticised Switzerland for a 2009 ban on the construction of new minarets for mosques.
It said that in Spain's Catalonia region many Muslims had to pray in outdoor areas because authorities were rejecting applications to build mosques on the grounds that they were incompatible with Catalan traditions and culture.