A naval board of inquiry found that Capt. Owen P. Honors committed misconduct, but it did not recommend that he be kicked out of the service.
Honors produced the videos while serving as executive officer on the USS Enterprise. They included simulated sex scenes, anti-gay slurs and other inappropriate material.
Honors said the videos were made to improve morale while teaching important shipboard lessons, such as water conservation.
He helped produce and appeared in the videos that aired on the ship's closed circuit television network between October 2005 and December 2007, when he was the ship's executive officer.
Maintaining morale is part of the executive officer's job and by all accounts the videos were wildly popular with the crew.
They were shown to thousands of sailors each Saturday night before a feature length film Honors' had chosen and many sailors proudly agreed to appear in them.
Honors was relieved of command in January after several of the videos were leaked to media outlets. He was assigned to administrative duties.
The Associated Press contributed to this report.