Israel made "substantial efforts" to avoid civilian deaths, it said.
The militant group Hamas, which dominates the Gaza Strip, called the Israeli report worthless.
It comes ahead of the publication of a UN inquiry into possible war crimes committed during the war, a report Israel dismissed as a waste of time.
The 50-day conflict between Israel and Gaza militants, lasted from July to late August 2014. It left at least 2,189 Palestinians dead, including more than 1,486 civilians, according to the UN.
On the Israeli side, 67 soldiers were killed along with six civilians.
The 277-page report, released by the Israeli foreign ministry, disputed the UN figures, estimating that 2,125 Palestinians had been killed, including 936 militants and 761 civilians, with the status of the remaining casualties unknown.
It said that Hamas militants disguised themselves as civilians and converted civilian buildings into military centres.
"This exploitation of civilian surroundings - which often constituted war crimes and crimes against humanity - posed significant operational, legal and ethical challenges for the IDF," the report said.
"Harm to the civilian population... occurred as the result of unfortunate - yet lawful - incidental effects of legitimate military action in the vicinity of civilians and their surroundings," it added.
"Israel did not intend, and deeply regrets, the harm caused to the Palestinian civilian population and surroundings during the 2014 Gaza Conflict."
A spokesman for Hamas said the Israeli report was "valueless".
"Israeli war crimes are clear because they were committed in front of live cameras," Sami Abu Zuhri said.
Meanwhile, a report from the UN Human Rights Council on the war is also expected to be published this week.
The council says its inquiry will cover "all violations of international humanitarian law" committed by both sides during the Gaza conflict.
Israeli Prime Minister Benjamin Netanyahu said on Sunday: "Whoever wants a baseless, automatic accusation against Israel can waste their time reading the UN report."
In April, a UN inquiry said that at least 44 Palestinians had been killed by "Israeli actions" while sheltering at seven UN schools during the war.
The inquiry also found that three empty UN schools were used by Palestinian militants to store weapons, and that in two cases they likely fired from them.
The Israeli government has issued a report into the 2014 war in Gaza, saying that its military actions were "lawful" and "legitimate".