Investigators from the Independent Commission of Inquiry on Syria held state officials responsible for murder, rape and torture in their crackdown on protesters since March.
And they blamed orders from the top of Bashar Al-Assad's regime.
The panel interviewed 223 victims and witnesses, including defectors from President Al-Assad's security forces who told of shoot-to-kill orders against demonstrators and cases of children being tortured to death.
"The commission believes that orders to shoot and otherwise mistreat civilians originated from policies and directives issued at the highest levels of the armed forces and the government," the panel said in its report.
Chairman Paulo Pinheiro told reporters: "Members of the Syrian army and security forces have committed crimes against humanity in their repression of a largely civilian population in the context of a peaceful protest movement."
Damascus meanwhile lashed out at the Arab League for ignoring "terrorists" on Syrian territory in its decision to impose crippling sanctions.
The "Arab sanctions are a declaration of economic war on Syria," Muallem told reporters, to whom he showed the video depicting what he described as a mass grave.
"I apologise for these horrific images, but at the same time I offer them to the Arab League ministerial committee members who still continue to refuse the presence of these armed groups," said Muallem.
"The Arabs don't want to admit the presence in Syria of groups of armed terrorists who are committing these crimes, abductions and attacks on public places," he said.
Muallem called for dialogue to bring about national reconciliation, saying Syria was ready to accept Russia, its traditional ally, as a mediator.
Earlier, tens of thousands of pro-regime demonstrators thronged Sabaa Bahrat Square in Damascus to protest the Arab League sanctions.
They waved Syrian flags and the colours of Russia and China, which vetoed a UN Security Council resolution against Al-Assad's regime last month.
The Arab League approved the sweeping sanctions on Sunday over the Al-Assad government's crackdown on anti-regime protests – the first time the bloc has enforced punitive measures of such magnitude on one of its own members.
Measures include an immediate ban on transactions with Damascus and the central bank and a freeze on Syrian government assets in Arab countries.
They also bar Syrian officials from visiting Arab countries and call for a suspension of all flights to Arab states to be implemented on a date to be set next week.
Al-Assad's regime has already been subjected to a raft of Western sanctions, led by the United States and European Union.
Diplomats in Brussels said the EU was set to tighten its measures even further, targeting Syria's oil and financial sectors to deprive the regime of more sources of funding.
EU foreign ministers meeting on Thursday would ban exports of energy industry equipment, trading in Syrian bonds and selling of software that could be used to monitor dissidents, among other financial measures.
But Muallem said Syria could weather the sanctions.
"I reassure you that we have withdrawn 95 or 96 per cent of Syrian assets (from Arab countries)," he told reporters. "We must protect the interests of our people."
Al-Assad's regime is counting on support from neighbours Iraq and Lebanon, which voted against the sanctions at the 22-member Arab League, along with Yemen.
Hezbollah, the Shiite group that dominates Lebanon's government, denounced the sanctions as "shameful" and a "dangerous precedent.” The Arab bloc was becoming a tool for the Americans, it warned.
The United States and European Union called on the Syrian government to "end violence immediately" and allow the prompt entry of international rights observers and journalists, in a joint statement issued in Washington.
And at the United Nations in New York, the United States and Germany led Western calls for the divided UN Security Council to act against Syria following the UN report.
The United States and its European allies have already condemned the rare double veto by Russia and China.
Leading rights groups called for decisive UN Security Council action.
The Syrian Observatory for Human Rights said regime forces killed nine more civilians across the country on Monday, including six in Homs, adding to a UN estimate of more than 3,500 people to have died in the unrest since March.