The group`s aim is to completely erase the Yazidi way of life, it warns.
The report says major powers should do more to help the Yazidis, at least 3,200 of whom are being held by IS.
IS, a Sunni jihadist group, regards Yazidis as devil-worshippers who may be killed or enslaved with impunity.
Who are the Yazidis?
Yazidi women tell of IS abuse
Islamic State group: The full story
In August 2014, IS militants swept across north-western Iraq and rounded up thousands of Yazidis living in the Sinjar region, where the majority of the world`s Yazidi population was based.
Men and boys over the age of 12 were separated from women and girls and shot if they refused to convert "in order to destroy their identity as Yazidis", according to the report by the Independent International Commission of Inquiry on Syria.
"I was sold to a man in IS for $800"
Women and children often witnessed the killings before being forcibly transferred to locations in Iraq and later Syria, where the majority of the captives remain and are subjected to "almost unimaginable horrors", the report says.
Thousands of women and girls, some as young as nine, were treated as "spoils of war" and openly sold in slave markets or handed over as "gifts" to IS militants.
"Survivors who escaped from [IS] captivity in Syria describe how they endured brutal rapes, often on a daily basis, and were punished if they tried to escape with severe beatings, and sometimes gang rapes," said commissioner Vitit Muntarbhorn.
How the UN defines genocide
Article II of the 1948 UN Genocide Convention says genocide means any of the following acts committed "with intent to destroy, in whole or in part, a national, ethnical, racial or religious group, as such". They are:
- Killing members of the group.
- Causing serious bodily or mental harm to members of the group.
- Deliberately inflicting on the group conditions of life calculated to bring about its physical destruction in whole or in part.
- Imposing measures intended to prevent births within the group.
- Forcibly transferring children of the group to another group.
The commission also heard accounts of how some Yazidi women killed themselves to escape the abuse.
Young children bought and held with their mothers are beaten by their owners, and subjected to the same poor living conditions, according to the report.
Yazidi boys older than seven are forcibly removed from their mothers` care and transferred to IS camps, where they are indoctrinated and receive military training.
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