That finding emerged from an investigation launched by the Department of Justice in March 2013, Holder said at a press conference Thursday.
Cleveland's cops engage in "unnecessary and excessive use" of both lethal and non-lethal force, the department concluded, attributing the abuses to "systemic deficiencies, including insufficient accountability, inadequate training and equipment, ineffective policies, and inadequate engagement with the community".
In response to the Justice Department's findings, authorities in Cleveland have shown themselves ready to take steps to improve the situation, Holder said.
"And together, we have agreed to a Statement of Principles that will lead to a court-enforceable consent decree -- including an independent monitor who will oversee the implementation of sustainable reforms, assess compliance based on objective measures, and ensure that robust new policies and practices will result in more effective and constitutional policing," he said.
The Cleveland police department found itself in the spotlight following the Nov 23 death of a 12-year-old African-American boy who had been shot by an officer the day before.
Two officers went to a park after receiving a call about someone brandishing a gun, though the caller suggested the weapon might be a fake -- information the 911 dispatcher did not relay to the responding officers.
The police pulled up to the scene and one of them ordered Tamir E. Rice to show his hands. The youth reached into his waistband and pulled out what was later identified as an airgun that fires harmless plastic pellets.
One of the officers opened fire.
The release of the results of the federal probe of the Cleveland police comes a day after a grand jury declined to indict a white New York Police Department officer in the death of African-American Eric Garner.
New York Police Department (NYPD) officer Daniel Pantaleo will not face criminal charges for applying a chokehold while trying to detain Garner July 17.
The 43-year-old Garner, who was asthmatic, died of asphyxiation. The medical examiner classified the death as a homicide and said the chokehold was a factor.
Pantaleo and several other officers wrestled Garner to the ground while arresting him for allegedly selling untaxed cigarettes.
The incident was caught on video and Garner could be heard saying "I can't breathe" multiple times.
Nov 24, a St. Louis County grand jury declined to indict white police officer Darren Wilson for the fatal shooting of unarmed black teenager Michael Brown in Ferguson, Missouri.
President Barack Obama announced this week a set of measures to combat what he described as a growing lack of trust between local police forces and minority communities.
One part of the plan calls for spending $75 million to equip an additional 50,000 police officers with body cameras to document their interactions with the public.
Ferguson protesters demand 'meaningful reform'
Off duty policeman shoots black youth 17 times, racial tensions deepen