The survey of 318 current and former workers by the state's Anti-Discrimination Commissioner Sarah Bolt showed two thirds of respondents had witnessed discrimination, bullying or sexual harassment while at work.
Two in five workers have been bullied, and 15 per cent reported being sexually harassed.
All who identified as LGBTIQ reported being harassed.
"Key words used repetitively to describe the workplace in both the survey and throughout the submissions were 'toxic' and 'unsafe'," the report reads.
The inquiry found a culture of self-entitlement, status, power imbalances and a lack of accountability enabled poor workplace practices.
Three quarters of those who took part were working for an MP or working in parliament. The rest were MPs, bureaucrats or contractors.
More than four out of five were dissatisfied with the existing complaints process.
Ms Bolt said decisive leadership is needed to change the culture.
"It is difficult to find a plausible explanation for the lack of action taken to address repeated harmful behaviours, which continue to negatively affect current and former staff," Ms Bolt wrote.
"Differences of opinion and debate, the 'cut and thrust' of politics, are characteristics of this environment. However, such characteristics should never be used as an excuse for disrespectful, and often unlawful, behaviours."
Her report recommended creating a centralised independent human resources unit, better complaints system and implementing a code of conduct within twelve months.
"As with any workplace, while most people do the right thing, a proportion of people do not," Ms Bolt said.
She highlighted the "cascading effect of unsafe workplace behaviours" and the impact it can have on parliamentary staff and the public service.
"There was classist, sexist, racist and foul language overheard on a number of occasions. It felt like going back in time," said one anonymous respondent.
"The last time I made a complaint about a co-worker I was reprimanded," said another.
A joint media statement from Premier Jeremy Rockliff, Labor Leader Rebecca White, Greens Leader Cassy O'Connor and other senior figures accepted the report.
They condemned "unacceptable behaviour by a small number of people" and said everyone deserves to feel safe at work.
"It is clear Ministerial and Parliamentary Services need to focus on improving processes and policy, as well as training and reporting mechanisms," they said.
"It must also be acknowledged the report does detail some very serious concerns and challenges, and some of the commentary is confronting."
A committee will be established to go through the recommendations and aims to begin workplace training with MPs and managers later this year.
The survey came after senior Liberal staffer Andrew Hudgson was accused of verbally abusing Ms O'Connor while working for former premier Will Hodgman.
Tasmania's Department of Premier and Cabinet investigated the incident at the time and could not substantiate the claim.
Lifeline 13 11 14
beyondblue 1300 22 4636
22°C