The 81-year-old tycoon's British newspaper wing, News International, also misled parliament during its inquiry into the scandal at the tabloid, which Murdoch closed down in disgrace in July 2011.
"Rupert Murdoch is not a fit person to exercise the stewardship of a major international company," the cross-party media, culture and sport committee said in the 121-page report, entitled "News International and Phone-Hacking".
"If at all relevant times Rupert Murdoch did not take steps to become fully informed about phone-hacking, he turned a blind eye and exhibited wilful blindness to what was going on in his companies and publications."
The report singled out former News International executive chairman Les Hinton, former News of the World legal manager Tom Crone and the newspaper's final editor Colin Myler as having misled the committee.
Rupert Murdoch and his son James, who was News International's chairman and chief executive at the time, both gave evidence to the committee on July 19 last year, when Murdoch senior was attacked with a foam pie by a protester.
The committee's report, entitled "News International and Phone-Hacking", said senior executives at the company had misled their investigation.
The panel said it was now for parliament's lower House of Commons to decide "what punishment should be imposed" on those it thinks have treated the committee with contempt.