0119 GMT January 23, 2018
The death toll was "far higher than the Ugandan authorities claimed at the time", the US-based watchdog said in a Wednesday statement.
But the report was dismissed by the Ugandan government, which said it contained "inconsistencies" and challenged the allegation that children were among the dead, putting the death toll at just over 100.
HRW calculated its toll based on interviews with 95 relatives of victims, as well as with religious, security and administrative officials.
The clashes erupted in the western town of Kasese on November 26 and ended a day later when police stormed the palace of Rwenzururu King Charles Wesley Mumbere, who has been accused of commanding a militia with separatist ambitions.
Police said the violence started when a joint patrol of police and troops was attacked by the royal guards.
But HRW said it began when troops forced their way into a local administrative office, killing eight guards and sparking a wave of retaliatory violence, during which the palace guards used machetes to defend their turf.
It said the palace guards "often carry agricultural tools, such as machetes, but are not formally armed... and would not constitute an armed force or group under international humanitarian law."
HRW said at least 55 people, including 14 police officers, were killed on November 26, while more than 100 others, among them 15 children, died the next day.
But government spokesman Ofwono Opondo said the report lacked "depth" and contained "several inconsistencies ... that do not represent the true facts."
"It deliberately misses out incidents that led to the near-breakdown of law and order," he said in a statement, accusing the rights group of ignoring the wider context of years of violence by the militia.
He put the death toll at 103, among them 12 women and 40 men as well as 51 bodies which remained unclaimed.
And he challenged the allegation that children were among the dead. "As opposed to the HRW report that 16 children (sic) were killed during the operation, there is no evidence."
The report also "promotes violence in the region, referring to machetes as agricultural tools as opposed to Uganda penal code act defines them as lethal weapons," he said.
HRW has called for an independent inquiry into the incident.
"People in Kasese are still looking for their family members, including children, and they deserve answers and justice for these gruesome killings," said Maria Burnett, associate Africa director at HRW.
In December, the tribal king was charged with treason, but released on bail in February.
The traditional kingdom in western Uganda has a history of separatist leanings dating back to independence. The region where it is based is an opposition stronghold that has long complained of marginalization from Kampala.