The European Parliament's foreign affairs committee members also urged more guarantees of freedom of expression and religion.
Turkey began EU membership talks last year and its progress will be assessed by the European Commission in October.
It denies the deaths of hundreds of thousands of Armenians was genocide.
The report by the European Parliament foreign affairs committee will be voted by the whole parliament later this month.
It insists there are "persistent shortcomings" in areas such as freedom of expression, as well as religious, minority and women's rights.
'Politically biased'
The Turkish foreign ministry responded by saying that elements of the report lacked realism, were politically biased, and set conditions for membership that were anything but objective.
Armenians say 1.5 million of their people were massacred by Turkish troops as part of efforts to drive them out of eastern Turkey in 1915.
Ankara has always denied this was genocide, and insists the number of Armenian deaths has been exaggerated.
The EU enlargement commissioner has already warned of the potential failure of Ankara's membership bid, the BBC's Alex Kroeger reports from Strasbourg.
The MEPs' report says that accession negotiations could even come to a halt.
The parliamentary rapporteur on Turkey, Dutch MEP Camille Eurlings, called the slowdown in reform regrettable and urged Turkey to make progress.
If there was no progress, he said, stagnation would mean regression.
Gambellan Voice,