Teachers in some schools focus too rigidly on preparing pupils for exams, which makes lessons boring and hinders pupils' development, it said.
Problems in English and maths lessons were also highlighted.
"For some pupils the experience of English had become narrower in certain years as teachers focused on tests and examinations; this affected pupils'
achievement in speaking and listening in particular," it said.
On maths teaching, the report said: "Much weaker teaching was focused too narrowly on proficiency in examination technique at the expense of building understanding of concepts. In these circumstances pupils were passive, and often bored, recipients."
This resulted in pupils' progress at key stage 3 often being slower than at key stage 4, the report said. The best teachers, however, taught imaginative and enjoyable lessons that raised standards, it claimed.
John Bangs, the head of education at the National Union of Teachers, said:
"It is a real indictment of the testing system and I hope it leads to a fundamental review of national curriculum testing.
"What Ofsted is facing up to is that it is the devil's own job for teachers to go against the tide of practising for tests."
Mary Bousted, general secretary of the Association of Teachers and Lecturers, said the report was "outstandingly critical" of the current system and that the Government needed to act quickly to change the situation.
"Ofsted has been implicitly critical before, but this is a damning indictment," she said. "The Government cannot say they (tests) do not have a bad effect on children because its own inspector have said they do. These tests do not fit in with the personalised learning that Labour has said it wants to see."
The quality of teaching in a number of subjects, including science, ICT and maths, was also suffering from high levels of staff turnover and difficulties in recruiting appropriately qualified staff, the report said.