Schizophrenia affects more than 220,000 people in England and an estimated one in six people will experience some symptoms of psychosis at some stage in their lives, according to the report.
The Commission, established by the mental health charity Rethink Mental Illness, has called for a "radical" overhaul of the care system.
The report suggests that too much money is being spent on secure care - the most expensive form of care - and more should be invested in prevention and community support.
It also expresses concern that early intervention treatment teams are being cut in some areas.
Researchers claim that very few sufferers get the recommended levels of care.