The report found that the Bureau of Alcohol Tobacco and Firearms (ATF) lost track of the weapons after allowing them to be smuggled into Mexico under an operation called "Fast and Furious."
"This hapless plan allowed the guns in question to disappear out of the agency's view," said the report by Representative Darrel Issa and Senator Charles Grassley, both Republicans.
"As a result, this chain of events inevitably placed guns in the hands of violent criminals. ATF would only see these guns again after they turned up at a crime scene. Many of these recoveries involved loss of life," it said.
Two of the weapons were found at the scene of the killing of Brian Terry, a border patrol agent who was shot and killed in Arizona December 14 while trying to apprehend armed men preying on illegal immigrants.
Terry's family attended the hearing at which the report was made public.