A number of mental health patients were allegedly subjected to traumatic incidents while undergoing mandatory treatment including seclusion and restraint, and coercive treatment such as the use of induced comas.
The report, which was commissioned by the state's health department according to its authors, was released on Tuesday and called for a truth-telling process to hear and document cases it says are unresolved.
"On average, those within Victoria's mental health system may lose 30 years of life due to the medications they are forced to take," the report said.
"Some also die waiting for help ... while detained, they may be sexually assaulted.
"These experiences sit within living memory of the widespread use of lobotomies, insulin comas and other practices that are now regarded as inhumane."
Incidents of racism, sexual assault and violence were also reported.
Indigenous people in Victoria are subject to violent acts of seclusion and restraint at greater rates than non-Aboriginal people.
Families, carers and supporters have also been mistreated and neglected by the system, with a lack of information about treatment, care and support options.
While systemic flaws were highlighted during a 2021 mental health royal commission, the report found truth-telling and acknowledging harms were not the focus.
Human rights consultant Simon Katterl, who led the project, said the purpose of the report was to force the government to acknowledge harm.
"This isn't to vilify people who work in the mental health system," he told AAP.
"It's to say that what we think of good treatment is actually bad and we need to reconsider that.
"Let there be no doubt that there are gross human rights violations being committed within the mental health system on a daily basis and we really need to, as a matter of urgency, start acting on this."
Premier Daniel Andrews on Tuesday said he had not yet been briefed on the report.
"That lived experience coming out of the royal commission - and indeed during the royal commission process - was a very, very important part of considering what was wrong with the system and also laying out a plan to build a better system," he told reporters.
Mr Katterl said he provided a briefing to Victoria's Minister for Mental Health Gabrielle Williams in July 2022.
"We led with our recommendations in July 2022 and it is very concerning that close to a year later (Mr Andrews) doesn't know anything about it," he said.
The report, prepared from May 2022 to February 2023, involved a reference group of 10 consumers, survivors, family members, carers and supporters with lived experience.
The Department of Health has been contacted for comment.
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