The panel of three admirals made the recommendation Thursday after a daylong hearing at the Naval Air Station in Jacksonville.
The recommendation now goes to the Naval Personnel Command. A final decision will be made by the Secretary of the Navy. In the meantime, Nowak will continue working on the staff of the chief of Naval Air Training in Corpus Christi, Tex.
She flew on the space shuttle in 2006, but was dismissed from the astronaut corps after her arrest in 2007. There was no listed number for Nowak in Corpus Christi and Nowak's commanding officer in Texas didn't immediately return a call Friday.
The panel recommended downgrading Nowak from captain to commander and giving her a discharge of "other than honorable."
If the recommendation is accepted, the change in Nowak's rank means she will receive a pension at the rank of commander rather than captain. Additionally, only veterans who are discharged honorably can get benefits under the GI bill, said Stephen Strickland, a public affairs specialist at the Navy Region Southeast in Jacksonville.
Nowak was sentenced to a year on probation in November after pleading guilty to third-degree felony burglary and misdemeanor battery.
Nowak confronted her romantic rival, Colleen Shipman, in the parking lot of Orlando International Airport in February 2007 after driving from Houston. Shipman had begun dating Nowak's love interest, former space shuttle pilot Bill Oefelein.
Wearing a wig and trenchcoat, Nowak followed Shipman to the parking lot and tried to get into her car, then attacked her with pepper spray. Shipman was able to drive away.