Inspectors said there were many opportunities for the operator of the Davis-Besse plant to find the problem, which wasn't discovered until the plant was shut down in February for refueling.
"It should have been recognized," said NRC spokesman Jan Strasma.
The NRC said the damage did not pose a safety threat but did order operators of all 69 pressurized water reactors in the United States to submit information on the structural integrity of their plant's reactor head.
The NRC said it was the most extensive corrosion ever found on top of a U.S. nuclear plant reactor. Inspectors spotted a second cavity - 1 3/4 inch deep - two weeks later.
Plant employees found leaking boric acid created a 6-inch hole in the steel cap near a cracked control rod nozzle. The hole was stopped by a steel layer - three-eighths of an inch thick - impervious to the acid.
Significant corrosion began at least four years ago, according to preliminary findings of an NRC inspection. Inspectors said it was caused by cracked control rod nozzles.
FirstEnergy Corp., which operates the plant, said it was not surprised by the findings and that its own investigators came to the same conclusion, said company spokesman Richard Wilkins.
The NRC report was released at a public meeting attended by hundreds of residents. About a dozen opponents of the plant held up signs that said "No nuclear time bombs" and interrupted the meeting several times by yelling "You failed" and "Shut it down."
The plant had visual inspections over the years, but corrosion was overlooked because plant staff and management for years did not realize the significance of boric acid deposits on top of the vessel head, according to FirstEnergy's findings.
The company said similar corrosion can be found or avoided at similar plants if engineers know how to look for it.
Howard Bergendahl, a company vice president in charge of Davis-Besse, acknowledged that the problem should have been discovered earlier.
"We could have and should have found it in earlier inspections," he said.
The acid is a byproduct of the nuclear fission process inside the reactor. The reactor has 69 control rods. The nozzles are vertical tubes that house the rods, which absorb excess neutrons in the reactor core.
The damage to the reactor's steel cap will keep the plant shut down until at least June.
The plant is along Lake Erie and about 25 miles east of Toledo.