Rumsfeld told the Senate Armed Services Committee, "These events occurred on my watch. As secretary of Defense, I am accountable for them. I take full responsibility."
"I feel terrible about what happened to these detainees. They are human beings. They were in U.S. custody. Our country had an obligation to treat them right. We didn't. That was wrong," he said.
"To those Iraqis who were mistreated by members of the U.S. armed forces, I offer my deepest apology."
Rumsfeld, as well as other high-ranking defense officials including the Chairman of the Joint Chiefs of Staff Gen. Richard Myers, appeared before the committee after a week of intense controversy over photographs depicting U.S. guards at the Abu Ghraib prison near Baghdad mistreating Iraqi prisoners, often forcing them into sexually humiliating poses.
"I failed to recognize how important it was to elevate a matter of such gravity to the highest levels, including the president and the members of Congress," Rumsfeld said.
Committee Chairman John Warner, R-Va., said the panel needed to know "who knew what when, what they did about it, and why were members of Congress not properly and adequately informed."
Questioned by the ranking Democrat on the committee, Michigan Sen. Carl Levin, Rumsfeld said that not only the captors who were involved in the abuse would be held accountable for their actions, but also commanders further up the military chain of command.
Several Democratic lawmakers have demanded the secretary's resignation over the scandal.
Asked whether he could remain effective in his post, he said if he believed he could not, "I'd resign in a minute."
"I would not resign simply because people try to make a political issue out of it," he added.
President Bush offered a similar apology for the Iraqi prisoner mistreatment Thursday while also affirming that Rumsfeld would remain in his post at the Pentagon.
"Secretary Rumsfeld has served our nation well," the president told reporters during a joint media appearance with Jordan's King Abdullah II at the White House. "Secretary Rumsfeld has been the secretary during two wars and he is an important part of my Cabinet, and he'll stay in my Cabinet."
The president also said he was "sorry for the humiliations suffered by the Iraqi prisoners and the humiliations suffered by their families."
Rumsfeld's mention of compensation was a new development in the White House's reaction to the abuse problem.
"I'm seeking a way to provide appropriate compensation to those detainees who suffered such grievous and brutal abuse and cruelty at the hands of a few members of the United States armed forces," he said.
Rumsfeld also referred to videos of the abuse, a reference to findings in a military report that there were "numerous photos and videos of actual detainee abuse taken by detention facility personnel."
Though a number of photographs have been leaked to the media, no videotapes have been made public.
Warner and Levin both expressed their displeasure that they had not been informed of the abuse problem earlier.
Levin noted with "deep dismay" that Rumsfeld and Myers had briefed the panel about Iraq in a classified session last week but did not mention the scandal the government knew was about to break in the news media.
The secretary drew a declaration of support from Senate Majority Leader Bill Frist, R-Tenn, who came to the committee room to make a statement near the end of the testimony.
"I commend you for taking responsibility of what happened," said Frist.
Rumsfeld had just begun his opening statement when protesters in the hearing room interrupted him.
"Fire Rumsfeld!" some yelled before they were escorted out of the room. Rumsfeld waited silently while the room was brought back to order.
The committee session was televised live in the United States and in the Arab world, as well. Both Al-Jazeera and Al-Arabiya, the most popular television news stations in the Middle East showed the proceedings with simultaneous Arabic translation.
The secretary was scheduled to appear before the House Armed Services Committee later Thursday afternoon.