The report has also concluded there was no collaboration between Iraq and al-Qaida, one of President George Bush's central arguments for launching an invasion of Iraq last year.
US leaders and intelligence agencies failed for many years to grasp the gravity of the threat posed by radical Islamists and suffered from a collective "failure of imagination," the commission in its final report.
The report issued by the 10-member commission on Thursday pointed to "deep institutional failings" and missed opportunities by both the Bush and Clinton administrations to thwart the hijackings carried out by al-Qaida operatives which
killed almost 3,000 people in 2001.
The commission also sharply criticised Congress for failing in its oversight role on "terrorism" and intelligence issues.
Report says there was no link
between al-Qaida and Iraq
The commission recommended appointment of a national intelligence director and creation of a national counter-terrorism centre to better coordinate and share information about future threats.
The report said that as late as 4 September 2001, a week before the attacks on the World Trade Centre and the Pentagon, the Bush administration had not decided whether Usama bin Ladin's al-Qaida operation was a "big deal."
"Terrorism was not the overriding national security concern for the US government under either the Clinton or the pre-9/11 Bush administrations," the 567-page report said.
"The 9/11 attacks were a shock, but they should not have come as a surprise. Islamist extremists had given plenty of warning that they meant to kill Americans indiscriminately and in large numbers," it said.
"The most important failure was one of imagination. We do not believe leaders understood the gravity of the threat," the report said.
"The terrorist danger from bin Ladin and al-Qaida was not a major topic for policy debate among the public, the media, or in the Congress. Indeed, it barely came up during the 2000 presidential campaign," it said.
"We do not believe leaders understood the gravity of the threat"
The White House, which initially tried to block the establishment of the commission, has been awaiting the report nervously, hoping it would not interfere with Bush's campaign for re-election in November.
Bush, reacting swiftly to the report, called it "solid and sound" but did not discuss specific findings or recommendations. He said he would study the document and its recommendations, many of which he described as common sense and constructive.
Former senior counterterrorism official Richard Clarke, who served both former President Bill Clinton and Bush and who testified before the commission, said the report left many questions unanswered.