Eight police officers have been disciplined following the watchdog's investigations of the PSNI's actions.
Jonathan Magee went missing on Friday 28 January 2011, when his mental health had severely deteriorated.
His sister, Julie, in desperation called the police to report the 29-year-old missing, saying he was depressed and on medication.
He was later found and taken to hospital where he was then allowed to discharge himself out before a family member could reach him.
Despite warnings from medical staff that he should be considered high risk and suicidal, it was not until 8am that Saturday, police formally declared him as missing.
The PSNI's failings did not end there, a Police Ombudsman's investigation found.
Jonathan found himself in Lisburn and in a desperate state.
He spoke to police, but was adamant he should be left alone, despite telling officers where he had been and that he had taken alcohol or medication.
Police took the view he was no longer at risk.
However, just hours after making that call, Jonathan took his own life at Knockmore Bridge, near Lisburn.
The police search, the ombudsman's report found, was also hampered when bungling officers waited for two hours while specialist equipment was brought in to allow them to break into Jonathan's flat, only for the back door to be found open all along.
On behalf of the Police Service of Northern Ireland I apologise unreservedly to the family of Jonathan Magee for the police failings in this case and how it was investigated.
Superintendent Mark McEwan
Police Ombudsman Dr Michael Maguire found major failings in how the two inspectors, three sergeants and three constables responded to his disappearance and said basic errors meant crucial opportunities to find him were lost.
Dr Michael Maguire said: "Although they were told Jonathan was at 'high risk and suicidal,' it took police almost seven hours to formally make this assessment themselves and then having done so, they largely ignored it.
"Minimal inquiries were conducted into Jonathan's whereabouts in the last few hours of his life. A number of opportunities to find him and return him to the hospital were missed."
The family had always thought the police made every effort to find their son and have been left stunned at the Ombudsman's findings.
Julie Magee told UTV: "I think the police did a terrible job in how they handled the disappearance and I hope no one ever has to go through what we went through.
"How would they feel if it was one of their sons or daughters?
"They get to go to work and get home to see their family but my brother is never going to walk through our door again."
We will never get over it, we just have to work out a way to deal with losing our Jonathan.
Superintendent Mark McEwan said: "This is a profoundly difficult time for Mr Magee's family.
"Not only have they suffered the loss of a loved one but they have had to endure the additional trauma of the subsequent investigation into his death."
He continued: "This report is significant and challenging for the PSNI and one which we take very seriously.
"In order to reassure the public I want to make it clear that we have already implemented a number of the recommendations made by the ombudsman.
"He recommended that a total of eight police officers be given a disciplinary sanction - this has now been implemented.
Mr McEwan added: "A number of changes to PSNI procedures have been implemented since Mr Magee's death.
"The police data recording system (NICHE) is now the only system used to collate information on missing people and all investigating officers now have access to this material.
"In addition, missing persons investigations are monitored at a senior level within policing districts on a daily basis."
The family say an apology from the PSNI isn't enough, and that the whole system of how vulnerable people are treated needs to be addressed and revised.