Nearly 1000 searchers scoured the dense Nattai National Park for signs of 18-year-old Lily Hooper over eight days before a volunteer found her body on Thursday morning.
But for an estimated 10 minutes, her family were told of, and celebrated, their daughter's miraculous survival.
NSW Police Commissioner Mal Lanyon apologised for the "embarrassment and confusion" caused by the miscommunication.
He committed the force to a review of the communications failure alongside the State Emergency Service.
"I've spoken to the Commissioner of the SES. Together, we will look at the communication, obviously with a view to improving that," he said.
"This is not a circumstance I would like to see repeated.
"Communication is always a challenge, and in remote areas, from time to time, it can be challenging to get the right communication through.
"We want to make make sure it's as simple and accurate as possible."
He apologised for any "additional trauma" caused to the family, who had expressed their relief to media while believing Ms Hooper to be alive.
The miscommunication wound its way through police ranks to the NSW premier on Thursday, he additionally revealed.
Chris Minns had expressed relief at mistaken reports of Ms Hooper's survival during a parliamentary hearing before having to rescind his statements.
Mr Lanyon said the message "would have gone through police commands".
"The normal process it goes through a range of police commands to the Minister for Police, and then to the Premier's Office," he said.
The NSW premier later issued a statement apologising to the family.
"I genuinely believed I was sharing good news," Mr Minns said.
"I am profoundly sorry to think anything I said may have added to their heartbreak at an already devastating time."
Ms Hooper disappeared on August 12 after leaving her home to go on a hike.
The teenager from Oakdale, in Sydney's southwest, did not return that evening and could not be contacted on her mobile phone, triggering a wide-scale search.
Her car was discovered at the Bonnum Pic trail head the same night she went missing, but earlier on Thursday Assistant Commissioner Joseph Cassar said the teenager was found a long way from her vehicle.
"I can't give you the exact distance but ... it wasn't on a clear, walkable track," he said.
"It's thick, dense bush and a lot of it is steep cliff area."
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