The 47-year-old showed no emotion as he was also found guilty of also assaulting Mr Falconio's girlfriend Joanne Lees and depriving her of her liberty on an outback highway in the Northern Territory in July 2001.
Murdoch's lawyers immediately said he would appeal.
Speaking outside court, Ms Lees said she was delighted with the jury's verdict but also challenged Murdoch to reveal the whereabouts of Mr Falconio's body, which has never been found.
"I would like Bradley John Murdoch to seriously consider telling me, Joan and Luciano (Falconio) and Pete's brothers what he has done with Pete," she said.
The Northern Territory Supreme Court jury of six men and six women took just eight hours to reach their unanimous decision in a case which has excited intense interest in both Australia and Britain.
Chief Justice Brian Martin sentenced Murdoch to the mandatory life term for murder and told the jury: "I entirely agree with your verdict."
Submissions on a non-parole period will be heard at a later date.
The prosecution alleged Mr Falconio was shot in the head after Murdoch pulled over the couple's Kombi van on a remote stretch of the Stuart Highway, north of Alice Springs.
Murdoch then threatened Ms Lees with a gun, punched her in a head and bound her with cable-tie restraints, but she later managed to escape.
The prosecution suggested Murdoch may have killed Mr Falconio either because he thought he was following him, or because he saw Ms Lees driving the vehicle earlier and thought she was alone.
When the jury’s verdict was read out Ms Lees, who was sitting in the public gallery, leant forward and put her head in her hands.
Mr Falconio's brother Paul placed his arm around the Englishwoman's shoulder and his parents, Joan and Luciano, gripped her hands in a gesture of support.
Ms Lees and Mr Falconio's family have sat in court throughout the entire eight-week trial, which heard from 85 witnesses and had more than 300 exhibits tendered.
In the dock, Murdoch showed no emotion as the jury's verdict was read out nor when he was sentenced to life imprisonment.
Outside court, Murdoch's defence lawyer Grant Algie said he had been instructed to launch an appeal.
"Obviously we are disappointed with the result," he said.
Ms Lees said the verdict marks the conclusion of an intense period of distress for herself and the Falconio family.
"This will enable us to take another step in the grieving process for Pete. We would now request you all allow us some space and privacy to do this."
Mr Falconio's brother Nick added: "Today isn't a celebration for us. I have waited over four years for this day.
"We are pleased with the verdict but, however, this will not bring Pete back."
Paul Falconio added: "The most important thing now is to find Pete's body."
Mr Falconio's father Luciano said he would not be able to find closure until his son's body had been found.
Drugs and guns
Murdoch was arrested for Mr Falconio's murder by police investigating the rape of a 12-year-old girl in South Australia - a crime Murdoch was cleared of two years ago.
Prosecutors had alleged that Murdoch raped the girl before abducting her and her mother while in a state of drug-fuelled paranoia.
Officers who arrested Murdoch for the rape discovered a hoard of weapons inside his van, including a high-powered rifle, a pistol, almost 800 rounds of ammunition, a knife, a crossbow and chains and shackles similar to those used to bind the wrists of Ms Lees.
During the rape and abduction ordeal in South Australia in August 2002, Murdoch allegedly denied killing Mr Falconio, but admitted having one of his T-shirts, the South Australia District Court heard in October 2003.
The South Australian court heard Murdoch told the mother and daughter that he was "on the run" because the police had framed him.
The alleged rape victim, who was 13 when she gave evidence, said Murdoch had a white Landcruiser with a green canopy. She said she was blindfolded and her mouth taped.
Two years later Ms Lees told the Falconio murder trial that her attacker was driving a white four-wheeled drive vehicle, similar to a Toyota Landcruiser, which had a dark-coloured canopy over its rear.
The jury in the Falconio case also heard how Ms Lees's attacker covered her head with a sack during the attack and tried to tape her mouth shut.
The Darwin court also heard Murdoch vehemently resisted attempts to have his DNA analysed - tests which eventually linked him to Mr Falconio's murder.
He was arrested for the Falconio murder after the South Australian jury returned majority verdicts of not guilty on two charges of rape, two charges of false imprisonment, two counts of indecent assault and one of common assault in South Australia.
The South Australian jurors who acquitted Murdoch knew of the Falconio link.
Murdoch has previously served 21 months in jail for shooting at a group of Aborigines he claimed were harassing him.