The three-judge panel found Tajul Muluk guilty of insulting Islam with his religious teachings.
Citing testimonies from witnesses, the panel said Muluk had taught about revising daily obligatory prayers from five to three, saying the current holy book of Quran was no longer authentic and considering companions of the Prophet Muhammad to be infidels.
"The defendant has been legally and convincingly proven guilty of blasphemy," said presiding judge Purnomo Amin Tjahjo. "His acts, in principle have insulted Islam."
He added that Muluk had dispensed Shiite religious teachings that were declared heretical by the influential Indonesia Ulema (preacher) Council. The council and most Indonesian Muslims are Sunni.
The 39-year Muluk, also known as Ali Murtadlo, was arrested in April. He denied the charges and planned to appeal. The tightly guarded trial was heard at Sampang District Court in Madure, an island off eastern Java.
"This is a matter of dignity as they have considered me as an infidel," he said after his trial. "I have evidence that this trial was made up for political interests." He did not elaborate.
Indonesia is the world's most populous Muslim nation and its constitution guarantees freedom of religion. But it has seen various attacks and intimidations in recent years against minorities including Christians and Ahmadiyah who are considered as heretical.
The New York-based Human Rights Watch called on the government to drop the charges and to release Muluk, whose case highlights the threat Indonesia's blasphemy law poses to religious freedom.
" The government needs to reverse the growing trend of violence and legal action against religious minorities in the country," said Elaine Pearson, the group's deputy Asia director.