The investigation found "significant failures" by the Party to report £275,000 of spending during the 2015 General Election campaign and three by-elections in 2014.
It concluded there was a "realistic prospect" that the party gained a "financial advantage" over opponents.
The Commission has reported the actions of the then party treasurer Simon Day to the Metropolitan Police for investigation.
:: The expenses returns for the 2015 election were missing at least £104,765 of payments
:: £118, 125 of payments were incorrectly reported or not reported at all
:: Receipts for 81 payments to the value of £52,924 were not provided
:: No records kept for amounts invoiced to candidates in three 2014 by-elections.
Chair of the Electoral Commission Sir John Holmes warned that this was the third investigation where parties had been slapped with large fines and warned that it no longer appeared to act as an incentive to play by the rules.
He said: "This is the third investigation we have recently concluded where the largest political parties have failed to report up to six figure sums following major elections, and have been fined as a result.
"There is a risk that some political parties might come to view the payment of these fines as a cost of doing business; the Commission therefore needs to be able to impose sanctions that are proportionate to the levels of spending now routinely handled by parties and campaigners."
Police are investigating whether strict spending limits in target seats were breached during the Conservatives' "battle bus campaign".
As many as 24 Conservatives are understood to be under investigation over claims they overspent on their local campaigns in which spending is limited to £15,000 per constituency.
If they are found to have committed any offence, their political opponents could ask for contests to be rerun.
One of the seats questions have been raised over is South Thanet, where the Conservative MP Craig Mackinlay saw off a the threat of a victory for then UKIP leader Nigel Farage.
It has been reported that Mr Mackinlay was questioned by Kent Police for six hours last week. At least two other MPs are also thought to have been quizzed.
A Conservative Party spokesman said: "Political parties of all colours have made reporting mistakes from time to time.
"The Labour Party and Liberal Democrats both failed to declare sums of money which constituted a larger proportion of their national expenditure in the 2015 general election.
"Both have been fined by the Electoral Commission, and the Liberal Democrats are also under police investigation.
"This is the first time the Conservative Party has been fined for a reporting error. We regret that and will continue to keep our internal processes under review to ensure this does not happen again.
"Given the range of technical errors made by a number of political parties and campaign groups, there also needs to be a review of how the Electoral Commission's processes and requirements could be clarified or improved."