I found a huge error in my master's thesis which I defended a year ago
Correct the mistake for any peer-reviewed publications (journal, conference, etc). Don't worry about the thesis published at your institution. 

Reason being, your committee signed off in the work as a whole as fulfilling the merits of the degree. Yes, it's unfortunate, but theses often aren't indexed by journal searches, and even when they are, they are generally interpreted with less weight. 

On the bright side, you recognized an error others might not have. Apply this lesson moving forward. In any other case, you'd have to retract. 

PS - I did the same thing during my masters thesis. Didn't sleep for a week.