The TransAsia Airways Flight plunged shortly after take-off from Taipei's Songshan airport in February with 53 passengers and five crew on board.
15 people survived the crah.
Disturbing cockpit transcripts released by Taiwan's Aviation Safety Council revealed the pilots trying to deal with an engine that had lost power, but then accidentally reducing the thrust of the other, functioning engine.
The report reveals that seconds before the crash the black box recorded the pilot saying: "Wow, pulled back wrong throttle", leading the plane's one working engine to fail.
The last words from the black box recordings were the monitoring pilot shouting: "Impact, impact, brace for impact."
"As the pilot pulled back the wrong throttle, for some time both engines were powerless," said Thomas Wang, head of the aviation council.
Mr Wang also confirmed previous reports that the pilot had failed a simulator test for engine failure on take-off last year, but passed on his second attempt.
Investigators refused to name the pilot at the controls, but reports at the time of the crash identified him as Liao Chien-tsung.
TransAsia pilots will undergo a skills test following a second deadly accident in seven months. (AAP)
Initially Mr Liao was hailed as a hero for steering the plane away from houses and into the river.
Mr Liao's parents defended their son following the release of the report.
"At the end of the day, my son is dead, either as a 'hero' or being blamed is meaningless to us now," Liao's father Liao Hsien-ming, told the United Evening News.
He added that he still felt proud of his son saying he had tried to reduce casualties on the ground in the final seconds before the crash.
"Why the pilot did this, we don't know. That's the main task for our (final) analysis report," said Wang over the decision to pull back the throttle on Engine One.
The draft of that report is due out in November with the final version expected in April 2016.
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