Software errors led prison officials to mistakenly release some 450 inmates deemed to have a 'high risk for violence', as part of a programme meant to ease overcrowding in the state's jails.
And more than 1,000 additional convicts said to present a high risk of committing drugs crimes, property crimes and other offences were also freed.
The news comes after the U.S. Supreme Court ruled that California's prisons are dangerously overcrowded, and upheld a ruling giving the state two years to slash prisoner numbers.
No attempt has since been made to return any of the offenders to prison or to put them on supervised parole schemes, inspector general spokesman Renee Hansen told the LA Times.
All of the released prisoners have been placed on so-called 'non-revocable parole' - meaning that they do not have to report to parole officers and can only be sent back to prison if they are caught committing another crime.
Inmates who are gang members, sex criminals or violent criminals are determined to pose a risk of re-offending and are not thought to be suitable for the scheme.
But a report by the inspector general found that the computer programme that officials used to make their assessments does not access inmates' disciplinary histories.
The inspector general also found that the programme relies on a Department of Justice database that records arrests, but which is missing conviction information for nearly half California's 16.4million arrest records.
The inspector general's office made their shocking findings after a review of the case files of 200 of the 10,134 prisoners on non-revocable parole in July last year.
The inspector general found that of those released 31 were ineligible - a 15 per cent error rate - and nine of those were thought to be at high risk of committing violent crime. Read More