Ban asked all countries to come up with national plans and outline steps that go beyond the narrow scope of military and security responses to the threat from IS and other violent groups.
"Many years of experience have proven that short-sighted policies, failed leadership, heavy-handed approaches, a single-minded focus only on security measures and an utter disregard for human rights have often made things worse," Ban told the UN General Assembly.
"We need cool heads and common sense," he added.
Several countries have taken tough measures against convicted jihadists, imposing harsh jail sentences and stripping them of their citizenship.
Ban's plan of action encompasses a broad range of measures, from boosting education to promoting human rights to counter the recruiting drives of groups like IS and Boko Haram which prey on disaffected youth.
Among the 79 recommendations are measures to incite foreign fighters who have joined IS to return home by offering them education and job opportunities.
Ban appealed for programs to address radicalization in prisons, which have emerged as hotbeds for jihad in several countries.
An international conference on countering violent extremism is expected to take place in Geneva in April to take stock of worldwide efforts to tackle the problem.
Over 30,000 foreign fighters from more than 100 UN member-states have joined violent extremists like IS to fight in Syria, Iraq, Afghanistan, Libya and Yemen, according to the UN.
"The international community has every right to defend against this threat using lawful means, but we must pay particular attention to addressing the causes of violent extremism," Ban told the assembly.
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