Pearl was murdered by the alleged brains behind the September 11, 2001 attacks, Khaled Sheikh Mohammed, not by British-Pakistani Omar Sheikh and three other men also convicted for the killing, said the Pearl Project report, released on Thursday.
Mohammed has told US investigators he slit Pearl's throat and cut off his head, and an FBI agent used a technique called vein-matching to identify Mohammed's hand as the "beefy right hand" seen killing Pearl in a chilling video of the murder.
But so far, US officials have refused to prosecute him.
Doing so could unravel the US strategy for trying Mohammed along with four others for the attacks in New York and Washington on September 11, 2001, said the investigative report, which was led by Pearl's friend and former Wall Street Journal colleague Asra Nomani and Georgetown University professor Barbara Feinman Todd.
"They didn't want to go after him because it would complicate their 9/11 case. That doesn't serve justice," Todd told AFP.
"We hope that this report will spur a renewed interest in this case on the part of our government and the Pakistani government," she said.
The probe team went into the streets of Karachi and villages of Pakistan to try to piece together the last few weeks of Pearl's life.
Gleaning information from interviews, court documents, secret Pakistani police interrogation reports, FBI interview reports and State Department cables, the probe team, including 32 Georgetown students, made "sense of a jumble of aliases so that we could know the faces and stories of the men with whom Danny spent his final days."
And one thing they found was that none of the four men convicted of Pearl's murder "was ever involved in the kidnapping or murder directly," said Nomani.
Sheikh's role had been to lure Pearl to Pakistan and the other three helped put together a ransom note.
Nomani and Todd both believe Sheikh was trying to negotiate a ransom payment for Pearl, and would have released him.
But then Mohammed, who is referred to in the report by his initials KSM, came into the picture after a senior Al-Qaeda operative called him to say that a group was holding a journalist in Karachi and "didn't know what to do with him," Nomani said.
"We don't know if KSM was ordered to murder Danny but what we do know is that he went across town with a bag, and in that bag were two knives, a meat cleaver, and a video camera," she said.
Mohammed has told FBI agents that he had "killed Danny for propaganda purposes", adding that it was "convenient that he was Jewish."
And the report cites then White House national security advisor Condoleezza Rice as telling Pearl's widow Mariane in 2003 that US officials thought KSM had "committed the actual murder."
The report draws a picture of several hapless, inept and bungling cells of young men who were involved in the kidnapping or murder, and says US and Pakistani officials who worked the case were not much better.
Officials pursued "the wrong suspect, giving the killers time to slay Pearl and disappear."
Nomani and Todd set out to piece together the events that led to Pearl's brutal death because they believed "the truth had been left behind" with the hasty conviction of Sheikh and his three accomplices.
"The picture is a lot clearer now, but there's more," Todd told AFP.
"There's the ISI piece of it," she said, referring to Pakistan's intelligence services.
The report was released nearly three years to the day that Pearl disappeared after leaving Nomadi's Karachi home, thinking he was going to interview the man who "facilitated" shoe-bomber Richard Reid's attempt to blow up a US passenger jet by igniting explosives packed in his footwear.
Pearl's body was found four months after he disappeared, cut into a dozen pieces, the head severed, the upper torso still clad "in the light blue track suit that Pearl?s kidnappers had him wear," the report said.
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9/11 MASTERMIND KILLED DANIEL PEARL: FBI
National Post - 20 minutes agoThe US journalist Daniel Pearl was beheaded by Khalid Sheikh Mohammed, self-confessed mastermind of the 9/11 attacks, says a newly released FBI forensic test.Report: Top al-Qaeda figure killed Pearl Washington Post
*This article is being posted from Toronto, Canada By DTN News ~ Defense-Technology News, contact: dtnnews@ymail.com
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