"A kiss on the cheek by a first-grader does not constitute sexual harassment, " the government said, exonerating Johnathan Prevette, from Lexington, North Carolina, who was rebuked for giving a classmate a peck on the cheek.
The 47-pages of guidelines call on school officials to use good judgment and common sense in most instances - for example, by considering an alleged offender's age.
They define sexual harassment as severe, persistent and pervasive behaviour that "interferes with academic performance and emotional and physical well-being" - if school employees or other students make unwelcome sexual advances or requests for sexual favours, for example.
On the other hand, the First Amendment to the US Constitution guaranteeing freedom of speech takes precedence in many cases, the government said. For example, male students who sabotage a female student's laboratory experiment would be guilty of sexual harassment, but male students who write academic papers that include sexually derogatory themes about women would not.
Heckling gay and lesbian students would not be considered sexual harassment, while physically threatening them would.
There also are detailed warnings about sexual harassment by school employees.
Teachers are cautioned not to repeatedly touch or put their arms around their students, except perhaps to console a child who is depressed or injured. But it is OK for a school athletic coach to congratulate a player with a hug.
The report is more than a suggestion. All schools will be required to adopt policies against sexual harassment. Those that fail to comply, or ignore the guidelines, risk losing all their federal funding. And a school is liable for even one instance of harassment by a teacher, administrator or other employee, whether or not administrators knew about it.
"It all really comes down to that, if a student or faculty member alleges they are being sexually harassed, then it's incumbent on the school to act upon it," said Roger Murphy, spokesman for the Education Department.
"If they do that, there's no liability."
The department said it found that "a significant number" of students, both male and female, had experienced sexual harassment.
"We were getting a lot of inquiries from school officials saying they were not real sure about how or whether they were in compliance," Mr Murphy said.
Johnathan Prevette received international attention and support last fall after he was banished from his class and ordered to miss an ice-cream party. His mother said that he was happy to have been exonerated by the US government.