The report alleges that the governments of France, Belgium, the Netherlands, Switzerland and Spain encourage discrimination instead of combating it.
"Muslim women are refused a job and Muslim girls are not allowed into class because they wear traditional garb. Men may be sacked because they grow a beard, a practice associated with Islam."
Amnesty International also accused Belgium of allowing employers to discriminate using the pretext that religious and cultural symbols may put off colleagues and customers.
Several municipal authorities and stores ban the wearing of religious symbols like the headscarf and the Jewish kippah.
Amnesty says that such clothing forms part of a personal expression and that a ban violates European legislation.
"A ban on wearing clothing is not the right approach. A blanket ban limits access to education for girls and violates their right to express themselves freely."