The damning report said detained children were subjected to physical abuse, encouraged or paid to perform humiliating acts and denied essentials like food, water and the use of toilets.
It also found that isolation was used inappropriately and punitively, which "caused suffering to very many young people and likely caused them enduring psychological damage".
The government ordered the royal commission, a national inquiry, into youth detention last year after public broadcaster ABC aired footage showing children being tear- gassed and mistreated at the Northern Territory's Don Dale detention centre in 2014 and 2015.
Aboriginals make up about three per cent of the national population of 24 million people but are among the most disadvantaged Australians, with many living in the Northern Territory.
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Aboriginal children are 24 times more likely to be detained than non-indigenous Australian children, according to Amnesty International. A government-backed report said last year that their imprisonment rate had increased 77 per cent over the last 15 years.
The royal commission looking into the Northern Territory abuse said the "shocking and systemic failures occurred over many years and were known and ignored at the highest levels".
The commission has called for the closure of Don Dale and made a raft of recommendations to overhaul the territory's youth justice system, including a ban on the detention of children under 14 and wider engagement with Aboriginal organisations for child protection.
The federal government today described the commission's findings as "abhorrent", pledging to work with the territory government to address the recommendations.
"All children deserve to be treated with dignity and respect. All children deserve to be safe," federal Indigenous Affairs Minister Nigel Scullion told reporters on Friday.
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