Peter Beattie, head of St Aidan and St Oswald primary, was singled out for criticism in an inspection report despite the fact that pupils achieve test scores above the national average.
Mr Beattie went on sick leave with a stress-related illness shortly after the verdict was delivered.
Forty-two of the borough's 90 primary heads have signed a letter accusing inspectors of "stretching credibility" by identifying significant weaknesses in Mr Beattie's leadership and management.
The inspection, carried out in July last year, found significant underachievement in geography, history and art and design.
But the report praised pupils' reading and mathematical problem-solving and the standard of teaching and learning.
In the letter to David Bell, chief inspector, the Oldham heads asked: "Is Ofsted unique as a public body in its capacity to wreak personal damage without offering individuals any redress or right of reply?
"(Mr Beattie) has been made to feel inadequate to undertake a role for which many felt he was eminently well-suited."
They say that the report is one of a growing number which carry the message that a school is doing well but its head is "useless".
The letter, co-ordinated by John Gardner, head of St Mary's primary, said:
"The huge difficulty with this goes well beyond the enormous damage suffered by our friend Peter and so many others before him. The impact of such reports paralyses rather than galvanises fellow headteachers.
"There go I but for the grace of God - or more accurately the lottery of which particular Ofsted team visits my school."
Mr Gardner said somebody should have to help those criticised by Ofsted to pick up the pieces. "Ofsted just walks away. For a public body that is an act of irresponsibility."
Mike Arnold, National Association of Head Teachers' regional officer, said:
"Mr Beattie has been very touched by the reaction of colleagues in Oldham."
An Ofsted spokesperson said judgements about Mr Beattie were not made lightly: "Ofsted is always sorry to hear that a group of headteachers is unhappy about the inspection of a colleague.
"The impact of the judgements on the individual is always considered, but the overriding factor is the need to ensure that pupils taught at the school are given the best possible chance to succeed."
Schools unhappy with their Ofsted reports can appeal to an independent adjudicator.