The report came out on the order of a court in Pretoria hours after Zuma abandoned a legal bid to delay its release.
The President, his son Duduzane Zuma, government ministers, the board of South Africa's state power utility, Eskom, and the Gupta family -- brothers Ajay, Atul and Rajesh Gupta -- are all implicated in what the report said could be breaches of ethics codes and in some cases criminal allegations.
The report recommends that Zuma appoint a commission of inquiry headed by a judge within 30 days to investigate the allegations.
Zuma has always denied any wrongdoing. He has maintained the support of the governing African National Congress despite repeated scandals.
Zuma's spokesman said his office was considering the report and whether to take legal action over it.
The ANC also said it would look at the report and comment on it Thursday.
The latest developments will add to the mounting pressure the President faces from South Africa's political opposition, business groups, civil society and legal quarters to step aside.
In a sign of the mounting public anger, crowds of protesters -- many wearing the red shirts of the Economic Freedom Fighters -- called for Zuma's resignation and blocked streets in downtown Pretoria.
Police used water cannons and stun grenades to try to disperse groups of demonstrators amid looting and increasingly chaotic scenes before the protests ebbed away.
Opposition: Zuma a 'blight' on country
Mmusi Maimane, leader of South Africa's chief opposition party, Democratic Alliance, welcomed the Public Protector's report as a "victory" for the constitution and rule of law against corruption by Zuma and his party.
"Following the findings in this report, Jacob Zuma should do the (honorable) thing and resign," Maimane said in a statement.
"The Zuma presidency has been a blight on South Africa -- only his resignation can help repair the damage he has caused.
"The report finds evidence of significant wrongdoing, improper influence, conflicts of interest and outright corruption -- much of which is new information, and all of which points directly to President Zuma, Duduzane Zuma and the Guptas."
South Africans frustrated
The ANC, the party that has ruled South Africa since the end of apartheid, suffered significant losses
in local elections nationwide in August, with Democratic Alliance gaining more than a quarter of the vote.
South Africans are increasingly expressing frustration with rampant corruption and poor public services.
In March, the Constitutional Court ruled Zuma had defied the South African Constitution when he used $15 million in state funds to upgrade his private home. An effort to impeach Zuma following that court's decision failed to get the necessary votes in Parliament.
A statement released Tuesday by the Nelson Mandela Foundation
, founded by South Africa's late president, called for the ANC to "take the steps necessary to ensure that the vehicle of state be protected and placed in safe and capable hands," saying "political meddling" had weakened critical institutions.
"South African citizens across the land are speaking out and taking action to express their dissatisfaction," it said. "The Nelson Mandela Foundation supports the demand to hold to account those responsible for compromising our democratic state and looting its resources."