Sergeant Matt Tonroe, 33, died last year alongside US commando Master Sergeant Jonathan J Dunbar while on a joint operation with US special forces against ISIS.
The Pentagon blamed their deaths on an improvised explosive device (IED) in a statement released days after the incident in March 2018.
But a probe into the blast in Manbij, northern Syria, has concluded Sgt Tonroe was killed in friendly-fire by a grenade.
Investigators could not rule out the possibility that a grenade carried by another coalition soldier killed both men, according to The Morning Star newspaper.
“It was initially believed that Sgt Tonroe was killed by enemy action, however subsequent investigation concluded that Sgt Tonroe was killed by the accidental detonation of explosives carried by coalition forces”
Sgt Tonroe, from Manchester, enlisted in the British Army in 2004 and was said to have made a name for himself with an “outstanding career”.
A Ministry of Defence spokesman said: “Sergeant Matt Tonroe died from blast injuries caused by an explosion during a military operation.
“It was initially believed that Sgt Tonroe was killed by enemy action, however subsequent investigation concluded that Sgt Tonroe was killed by the accidental detonation of explosives carried by coalition forces.
“Our thoughts continue to be with Sgt Tonroe’s family and friends.”
Sgt Tonroe, described as a “deeply intelligent man and one of life’s characters” by his CO, was the only British soldier killed in active duty during operations against ISIS.
The unnamed CO said he had “served his country with pride and was a first class soldier, proven in combat, faced risk willingly and was ever ready for more.”
He added: “He thus died as he lived: daring and fearless in duty.”
The explosion happened in the town of Manbij, 60 miles north east of Aleppo and close to the border with Turkey.
Five other US soldiers were wounded in the blast, but survived.