Four people died when the CHC Super Puma plunged into the sea on its approach to Sumburgh in August 2013.
The Air Accidents Investigation Branch (AAIB) said a lack of monitoring meant a reduction in air speed was not noticed by the pilots.
Attempts to recover were too late.
The report stated the investigation identified two main "causal factors".
It said: "The helicopter's flight instruments were not monitored effectively during the latter stages of the non-precision instrument approach.
"This allowed the helicopter to enter a critically low energy state, from which recovery was not possible.
"Visual references had not been acquired by the Minimum Descent Altitude (MDA) and no effective action was taken to level the helicopter, as required by the operator's procedure for an instrument approach."
The report explained: "The decreasing airspeed went unnoticed by the pilots until a very late stage, when the helicopter was in a critically low energy state.
"The commander's attempt to recover the situation was unsuccessful and the helicopter struck the surface of the sea.
"It rapidly filled with water and rolled inverted, but was kept afloat by the flotation bags which had deployed."
No evidence was found of any engineering issues causing the crash.
Passengers Sarah Darnley from Elgin, Gary McCrossan, from Inverness, Duncan Munro, from Bishop Auckland, and George Allison, from Winchester, lost their lives in the crash on 23 August 2013.
Fourteen people were rescued.
The report said the impact with the water was "survivable".
Of the four dead, the conclusions said one was unable to escape, one was incapacitated by a head injury, one drowned before reaching the surface, and the other died in the life raft from a chronic heart condition.
A total of 28 safety recommendations have been made but the report said many of them have already been implemented.
An initial AAIB report already found the crew failed to notice the helicopter's air speed dropping until it was too late.
In February 2014, the Civil Aviation Authority announced a series of measures aimed at improving offshore helicopter safety following an inquiry set up in the wake of the Shetland crash.
They included helicopters not being allowed to fly offshore in severe sea conditions, passengers having to be seated next to emergency exits, and a size limit for those on board.
Duncan Trapp, vice president for safety and quality at CHC Helicopter, said: "CHC deeply regrets the tragic Sumburgh accident, and we continue to extend our sympathies to the survivors and to the loved ones of those who died.
"Our priority is always the safety of our passengers and crews and we would like to thank the Air Accidents Investigation Branch (AAIB) for its thorough investigation.
"Although the AAIB makes no recommendations specific to CHC, immediately after the accident, and in the time since, we put in place additional measures to further improve safety.
"Among those actions, we have enhanced crew monitoring procedures and supported the industry-wide deployment of improved emergency breathing systems and training for offshore passengers and crew."
A Crown Office spokesman said: "The Crown welcomes the publication of the report by the Air Accidents Investigation Branch into the Sumburgh helicopter crash on 23 August 2013.
"The report's findings will be fully considered as part of the parallel investigation by Police Scotland, working with the assistance of the Civil Aviation Authority and under the direction of the Crown.
"We will endeavour to carry out our investigation as quickly as possible but the investigation is highly complex and challenging and requires specialist input from those with the necessary expertise in civil aviation.
"We will continue to keep the families advised of progress with the investigation."
The British Airline Pilots' Association (Balpa) said: "The Sumburgh incident was a tragedy for all those involved. Any accident, especially those resulting in loss of life, needs to be examined extremely carefully so that all the lessons can be learnt and similar accidents avoided in the future.
"Many safety improvements have already been made to helicopter operations since this tragic accident but pilots and safety experts will be examining the report to identify what more can be done to avoid a repeat.
"The challenge will be to drive up industry-wide standards at a time when the drive to reduce contract prices puts those standards under pressure."
A report into a helicopter crash off Shetland in which four people died has said flight instruments were "not monitored effectively" by pilots in the moments leading up to the incident.