Short answer: the plane crossed into Soviet airspace and was shot down as an “honest mistake.”
The facts from crashdatabase.com:
Location: Sakhalin Island, Russia
Airline: Korean Airlines
Aircraft: Boeing 747-200B
Fatalities/No. Aboard: 269:269
Details: On a flight from Alaska to South Korea, the airliner drifted off course and twice penetrated Soviet airspace. During the second penetration, the airliner was shot down by a Russian Su-15 Air Force fighter with air-to-air missiles. The aircraft crashed into international waters in the Sea of Japan. U.S. Representative from Georgia Lawrence McDonald killed.
From the attorneys who represented the victims:
A Soviet fighter shot down a Korean Airlines 747 in 1983. How do you prove that there was “willful misconduct” by the airline? This was the questioned that plagued the attorneys involved with the case. This is the standard that must be proven in order to recover full damages. Attorneys from our network were appointed to the committee that tried the case. Through thorough investigation, they were able to prove that a series of errors were made by the pilots during the flight. As a result, they won a verdict of willful misconduct against the airline.
From a lengthy article on the crash at http://www.rescue007.org/kaminski_article.htm :
For the Soviet military the accident with the Korean plane had little consequence. Osipovich was decorated with the Order of the Red Banner and the officer on duty for operations on the night of the accident was decorated with the Order of the Red Star. Other participants of the accident received bonus to their salaries. KGB destroyed all the documents and materials relevant to the accident. All that remained was a few tapes of communications between the ground control and the intercepting pilots.