The review faulted the Secret Service for poor communications that day and failing to secure the building where the gunman took his shots.
It also found more systemic issues at the agency such as a failure to understand the unique risks facing Trump and a culture of doing "more with less."
The review panel believes another shooting like Butler can happen again without reforms. (AP PHOTO)
The 52-page report issued on Thursday recommended bringing in new, outside leadership and refocusing on the Secret Service's protective mission.
"The Secret Service as an agency requires fundamental reform to carry out its mission," the authors wrote Secretary Alejandro Mayorkas of the Homeland Security Department, the Secret Service's parent agency, in a letter accompanying their report.
"Without that reform, the Independent Review Panel believes another Butler can and will happen again."
One rallygoer was killed and two others wounded when Thomas Matthew Crooks climbed onto the roof of a nearby building and opened fire as Trump spoke.
The former US president was wounded in the ear before being rushed off the stage by Secret Service agents. That shooting, along with another incident in Florida when Trump was golfing has led to a crisis in confidence in the agency.
The report by a panel of four former law enforcement officials from national and state government follows investigations by members of Congress, the agency's own investigators and by Homeland Security's oversight body.
The Secret Service said it was making changes.
"We have already significantly improved our readiness, operational and organisational communications and implemented enhanced protective operations for the former president and other protectees," the agency said in a statement.
The agency said it was looking at how to retain personnel, modernise technology and bolster training, and was working with Congress to increase funding.
A look at the report's key findings and recommendations:
The panel echoed previous reports that have zeroed in on the failure to secure the building near the rally that had a clear line of site to where Trump was speaking and multiple communications problems.
The panel recommended having a unified command post at large events. (EPA PHOTO)
The panel faulted the planning between Secret Service and the local law enforcement, and said the Secret Service failed to ask about what was being done to secure the building: "Relying on a general understanding that 'the locals have that area covered' is simply not good enough and, in fact, at Butler this attitude contributed to the security failure."
The review questioned why there were two separate command posts at the rally and found other communications problems, including the need to switch radio channels because radio traffic from agents protecting first lady Jill Biden at an event in Pittsburgh was coming across the channels of agents who were with Trump.
The panel said agency personnel operated under the assumption that they effectively had to "do more with less."
"To be clear, the panel did not identify any nefarious or malicious intent behind this phenomenon, but rather an overreliance on assigning personnel based on categories (former, candidate, nominee) instead of an individualised assessment of risk," it wrote.
The panel also faulted some of the senior-level staff who were involved in the rally for what they called a "lack of ownership."
The panel recommended new leadership, specifically from outside the agency, but the report did not say whether anyone should be fired.
Other recommendations included: having a unified command post at all large events; overhead surveillance for all outdoor events; security plans that specify how to mitigate line of site concerns out to 900 metres and who's in charge; and more training on how to get protectees out of dangerous scenarios.
The panel said the agency needs renewed focus on its core protective mission while expressing skepticism that the agency should continue with the investigations it currently conducts.
