The commission's Building Belonging report, tabled in parliament on Thursday, says the reform of existing anti-discrimination laws should aim to eliminate discrimination and sexual harassment "to the greatest extent possible".
"Creating a new Act will not only simplify the structure, language, and content of the law, but will hold symbolic significance," the report by Queensland's Human Rights Commission (QHRC) says.
"It will mark the point in time when we committed to strengthening Queensland's discrimination law and ensuring that the legislation is in step with today's society."
Gaps in the existing Act are exposing some people to ongoing discrimination which should be unlawful, the report notes.
"We also identified that some parts of the Act may be incompatible with the Human Rights Act 2019," it says.
The recommendations seek to shift the focus to preventing harassment before it happens, improve the complaints system and increase protections.
It found that most experiences of discrimination and sexual harassment are not reported.
"We heard a strong message about the barriers people face to making a complaint," the report says.
"These barriers can be compounding, and can have a disproportionate impact on people who face social and economic disadvantage."
Current anti-discrimination legislation is generally concerned with resolving complaints after discrimination occurs, Attorney-General Shannon Fentiman said on Thursday.
"The QHRC reforms would create legal obligations on individuals and organisations to actively take reasonable and proportionate steps to eliminate sex discrimination, sexual harassment, and other discriminatory conduct as far as possible."
Victims of domestic and family violence should be better protected from discrimination, such as when applying for a rental property, the report says.
Potential reforms also aim to ensure LGBTIQ+ students and staff feel safe in religious schools, while balancing protecting religious freedoms.
"The actions of Citipointe Christian College at the start of this year highlighted the importance of having specific protections for LGBTIQ+ students and staff at religious schools," Ms Fentiman said.
The Brisbane school made national headlines this year over the contracts, which said it would only enrol students on the basis of the gender that corresponds to their biological sex.
It also said homosexuality is "sinful", like bestiality, incest and pedophilia.
But Christian Schools Australia says the right of Queensland parents to choose a school that reflects their beliefs "could be trashed" by the reforms.
"Parents across Queensland looking for a faith-based education have every right to be very concerned by these recommendations," Mark Spencer, the Director of Public Policy says.
The Queensland government is now considering the report.
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