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 20-year-old, who played for the Old Trafford club at the youth tournament, has featured regularly for the Red Devils first team this season.
"I played in the competition two years in succession and it was a fantastic experience," said McNair.
United are back at the Milk Cup this year, competing in the Premier Section.
The club have been to 12 finals, winning six titles and they will be attempting to become the first team ever to secure three successive victories after triumphs over County Tyrone in 2013 and French club Vendee last year.
"I'm proud to be asked to make the Milk Cup draw," added McNair, who played in the 2011 and 2012 competitions.
"It makes me proud to see the Milk Cups won by the club displayed in the trophy room at Old Trafford.
"That alone indicates how much prestige is placed on the competition at Manchester United."
Impressive displays in the Premier League earned McNair a call-up to the Northern Ireland squad with his first appearance coming in a 1-0 defeat to the Scots at Hampden Park.
Among the newcomers at the Milk Cup this year are Zacatepec from Mexico in the Junior Section.
Another Mexican outfit, Club America, will contest the Premier Section which has again attracted the popular Strikers from California and OC Blues, who are based in the suburbs of Los Angeles.
Japan will be represented by Higashi Fukuoka and long-time supporters Otago from New Zealand are back once more for the 26-31 July tournament.
The Israeli government has issued a report into the 2014 war in Gaza, saying that its military actions were "lawful" and "legitimate".
[NEXT_CONCEPT]
Manchester United and Northern Ireland defender Paddy McNair will make the draw for this year's Milk Cup in Belfast on 26 May.