The group criticised the way local broadcasters implicated Serbs in the drowning of ethnic Albanian children.
The incident led to unrest in which 11 ethnic Albanians and eight Serbs died.
The report came as an influential pressure group said the province risked becoming Europe's "West Bank" unless the tensions were addressed.
The province is administered by the UN, but it is still formally part of Serbia and Montenegro.
Media reports of the drowning incident in March said the children had been chased into the river by local Serbs who set a dog on them.
"Without the reckless and sensationalist reporting on 16 and 17 March, events could have taken a different turn," said the OSCE's Miklos Haraszti in his report.
"They might not have reached the intensity and level of brutality that was witnessed or even might not have taken place at all."
The report said the media, specifically the broadcasting sector, displayed "unacceptable levels of emotion, bias, carelessness, and falsely applied 'patriotic' zeal".
The rioting was the worst outbreak of violence since the 1999 Nato bombing forced Serbia to withdraw its forces from Kosovo.
Since then, the number of Serbs living in Kosovo has dropped dramatically.
Vexed question
The foreign minister of Serbia and Montenegro, Vuk Draskovic, has said an independent Kosovo is "impossible".
Any attempt to form such a state would go against the wishes and rights of Serbs living there, he told the BBC.
But the call for an early start on final status talks was echoed on Thursday by Albanian President Alfred Moisiu.
"The more delay there is, the more space is given to extremist activities from all sides," Mr Moisiu said during a visit to Kosovo - the first by an Albanian president.