Avichai Mendelblit, Israel's military judge, said investigations "found crucial components of [the soldiers' descriptions] were based on hearsay and were not supported by specific personal knowledge".
He said it was unfortunate that the soldiers, who discussed their Gaza experiences in a closed-door session on February 13, had been careless about accuracy.
"It will be difficult to evaluate the damage done to the image and morals [of the Israeli army] in Israel and the world", his statement said on Monday, adding that he would not be pressing charges.
Disturbing accounts
Investigators highlighted two specific incidents which were widely reported, of the cold-blooded killing of civilians and allegations of deep contempt for Palestinians amid Israeli army ranks.
They said one a soldier who alleged that a comrade was given orders to shoot an elderly woman had not witnessed such an event and "was only repeating a rumour he had heard".
They said they noted that a woman who approached troops and was suspected of being a suicide bomber had been fired upon repeatedly to try to stop her advancing on them.
Israel has said far more fighters than civilians were killed during the 22-day offensive than were reported in widely used Palestinian figures.
The army said 295 civilians were among 1,116 Palestinians killed between December 27 and January 18, without providing a list of the dead.
The Palestinian Centre for Human Rights said the total death toll of 1,417 included 926 civilians, and published a list of their names.
After a week of aerial bombardments, the Israeli military launched a two-week ground offensive on Gaza.
Israel has said it did everything it could to prevent casualties among Gaza civilians, including dropping leaflets and sending phone messages to civilians to evacuate certain areas.
It has also said Hamas used civilians as human shields, booby-trapped homes and fired on troops from densely populated areas.