The panel's recommendation now goes to university officials for a final decision.
Ward Churchill, a tenured professor of ethnic studies, denied the allegations. He has vowed to fight his dismissal with a lawsuit.
"Baloney. That's my one-word-response," he said. He noted there have been previous calls for his removal, "whether or not it was legal."
The school's investigation focused on allegations that Churchill committed research misconduct and plagiarism.
In a written statement, Churchill dismissed the investigation as an attempt to silence him.
"This process has not demonstrated that I engaged in any serious research misconduct but that, after more than a year of painstaking review, those charged with firing me could find nothing more than a few footnotes and questions of attribution to quibble over," he wrote.
The panel did not address his essay relating the 2001 terrorist attacks to U.S. abuses abroad. The essay referred to some World Trade Center victims as "little Eichmanns," a reference to Adolf Eichmann, who carried out Adolf Hitler's plan to exterminate European Jews during World War II.
The essay was largely ignored until January 2005, when it came to light before a scheduled speech at a college in upstate New York.
Churchill's case has been cited by conservatives as an example of how universities have overstocked their faculties with leftists. Others raised concerns about academic freedom.