20 year-old Sergeant Elor Azaria shot the man in the head while he was lying on a road in West Bank city of Hebron.
Sergeant Azaria told the court he shot the 21 year-old Palestinian because he thought he might have been wearing a suicide vest, but prosecutors argued he was motivated by revenge.
The case has divided Israelis with some taking to the streets to protest against the prosecution and now conviction of 20 year-old Sergeant Elor Azaria.
Last March, 21 year-old Palestinians Abdul Fatah al-Sharif and Ramzi Aziz al-Qasrawi stabbed an Israeli solidier at a military checkpoint in Hebron before troops opened fire on them, wounding Sharif and killing Qasrawi.
Footage released by Israeli human rights group B'Tselem shows Sharif wounded but alive when Sergeant Azaria is seen aiming his rifle and fatally shooting Sharif in the head.
Sergeant Azaria says he decided to shoot because he believed Sharif continued to pose a threat and could have been wearing a suicide vest.
But the prosecutors argued Azaria had violated the rules of engagement because Sharif was lying on the ground wounded and represented no threat to Sergeant Azaria or others who were present.
A panel of three military judges accepted the prosecution case and found Azaria was motivated by revenge.
Another soldier gave evidence to military investigators that Sergeant Azaria told him during the incident:
"They stabbed my friend and tried to kill him - he deserves to die."
Sergeant Azaria told the court he didn't remember having such a conversation but the head judge described Azaria as an unreliable witness.
Prosecutor Nadav Vaisman says Azaria deserved to be put on trial.
"The judges decided that it was an unjustified shooting and contrary to the army regulations, which he was familiar with. This is not a happy day for us. We would have preferred that this hadn't happened and that Azaria hadn't stood trial. But the deed had been done and the situation was grave. "
Professor Efraim Inbar, from the Begin-Sadat Centre for Strategic Studies, has served in the Israeli Defence Force.
He says the rules of engagement are clear.
"It seems to me, having been in combat situations before, that you simply don't shoot at an incapacitated terrorist. You can shoot at him, kill him when he is still armed but after he's disarmed, the fire regulations of the Israeli Defence Force don't allow it. I think he made a mistake and he pays for it."
Others see it quite differently.
Yishai Fleisher is a spokesman for the Jewish settler community of Hebron.
"This soldier, what he did, even if he may have shot a little after the fact that the terrorist had already been shot, at the end of the day he's protecting the homeland, he's protecting it from a gigantic jihad that encircles us and so therefore we're sending the wrong signal to our young soldiers to think too many times before shooting somebody who came to kill Israelis and Jews and is really a jihadist terrorist."
A man who rallied in support of Sergeant Azaria, Eitan Cohen, says the soldier acted morally.
"Killing a terrorist is one of the most moral things you can do. There's a terrorist trying to kill people -the only logical thing to do to such a person is kill him. He has no right to live."
Prime Minister Binyamin Netanyahu says the verdict marks a painful and difficult day and says Sergeant Azaria should be pardoned.
Azaria faces a maximum sentence of 20 years in prison and his defence team says it will appeal the conviction.
The father of the man shot dead by Azaria, Yusri al-Sharif, says the verdict is a good result.
"The Israeli verdict to say he is guilty is a good step, not bad, and we hope that the sentencing will be fair."
