The pastor told the RUC in the 1980s that he abused a boy who was being cared for at the former Bawnmore children's home in north Belfast.
The inquiry also heard from counsel Christine Smith that the former care worker told the RUC in the mid-80s about "other sexual incidents involving other people in the various places" where he worked.
The Historical Institutional Abuse Inquiry was told that the police wanted to pursue a prosecution against the man who cannot be named.
However, prosecutors decided against it because the incidents linked to the Bawnmore boy happened 17 years previously.
The man now lives in another part of the world.
The victim only heard about that decision on Monday, more than 30 years later.
He told the inquiry: "I found out today the truth has been told. Thank God I can now put my head to rest with it. Just happy at that."
Another man, a Catholic, also told the inquiry of how a staff member subjected him to sexual and sectarian abuse at Bawnmore.
Clearly distressed on the witness stand, the man wiped away tears and held his head in his hands as details of the alleged abuse he suffered were outlined to the inquiry.
A friend who accompanied the witness shook his head in disbelief as the extent of the abuse was presented.
When asked what should happen now, the witness replied: "I'm not the only one, there are thousands. Just say sorry."
A religious minister has never been prosecuted despite admitting abuse linked to a state-run home in Belfast, an inquiry has heard.