Mohamed Fahmy and Baher Mohamed were present for the proceedings, with the latter given an additional six months in prison and a fine of 5,000 Egyptian pounds ($640.)
The journalists were charged with aiding a terrorist organization, a reference to the Muslim Brotherhood, which was outlawed in Egypt after the army overthrew President Mohamed Morsy amid mass protests against his rule in 2013.
The judge didn't mention terrorism on Saturday. The court confirmed over 13 sessions that the defendants are not journalists and worked without a broadcast license, Judge Hassan Farid said. "They broadcast video footage that contained false news and aired it after editing it on Al Jazeera with the aim of harming the country," he said.
The defendants have said they were just doing their jobs, covering all sides of the stories in Egypt.
Al Jazeera Media Network's acting director general Mostefa Souag condemned the verdict, saying it "defies logic and common sense" and follows a heavily politicized and unfair trial process.
The court's ruling means Fahmy and Mohamed must return to prison, he said.
"Today's verdict is yet another deliberate attack on press freedom. It is a dark day for the Egyptian judiciary; rather than defend liberties and a free and fair media they have compromised their independence for political reasons."
All three were convicted last year on charges that included conspiring with the Brotherhood, spreading false news and endangering national security, but they have maintained their innocence.
The three appealed their convictions, and in January their attorneys announced that Egypt's highest court had granted them a retrial and they were released on bail.
The reasoning for the court's verdict has not yet been released.
Announcing the decision, the judge listed several charges he said had been confirmed -- including that the three were not registered journalists, possessed unlicensed broadcast equipment and broadcast footage containing "false news."
Greste: No evidence to support charges
Greste voiced his anger over the verdict via Twitter and in an interview with CNN from Sydney.
"I'm absolutely devastated by this verdict," he said. "There is no basis whatsoever in evidence to confirm any of the charges."
Every independent observer who followed the trial, including diplomats, legal experts, lawyers and journalists, "has confirmed that there was never any evidence presented in court whatsoever to substantiate the allegations," Greste said.
"And so far as I'm concerned, the only conclusion we can come to is that this verdict was politically motivated."
If Egypt issues an international arrest warrant, Greste said, he won't be able to travel to any country that has an extradition treaty with Egypt.
This will devastate his career as a foreign correspondent, he said, "but that really is a minor inconvenience compared with what my colleagues are having to go through."
Mohamed has three young children, one of them only a year old, as well as a wife, said Greste, while Fahmy also has a new wife he will leave behind.
Both Mohamed Fahmy and Baher Mohamed will be able to appeal the verdicts in a higher court, but Greste will not because he was not physically present in court.
However, the Australian said he would be using every means at his disposal -- political, legal and diplomatic -- to try to clear his name and right this injustice, backed by Australia's Foreign Ministry.
In a statement on her official website,
Foreign Minister Julie Bishop said she was "dismayed" by the court's decision and said she would "continue to pursue all diplomatic avenues with my Egyptian counterpart to clear (Greste's) name."
The U.S. State Department said it was "deeply disappointed" by the verdict and urged the Egyptian government to take all measures to redress it.
"The freedom of the press to investigate, report, and comment -- even when its perspective is unpopular or disputed -- is fundamental to any free society and essential to democratic development," State Department spokesman John Kirby said.
Clooney: 'Really disappointed'
Greste also said he would seek to ensure Egypt's President Abdel Fattah el-Sisi lives up to past promises that he would pardon the Al Jazeera journalists when the opportunity arose.
At the time the journalists made contact with the Muslim Brotherhood, it was not a banned organization, Greste added. The three were simply carrying out responsible journalism as they sought to make sense of a time of great political turmoil for the Al Jazeera English channel, he said.
Fahmy's wife, Marwa Omara, broke down in tears as the sentence was announced.
"The verdict was extremely unjust and was extremely unfair," she said.
His lawyer Amal Clooney, wife of Hollywood star George Clooney, said the verdict was an outrage.
"We are really disappointed," she said.
"Everyone who has looked at this case, every independent third party has said there is no evidence whatsoever of any criminal wrongdoing. The U.N. has said it, the EU has said it, the U.S., the UK [and] other governments."
Rights group: 'Farcical verdict'
Amnesty International also condemned the court's ruling, saying the charges against the journalists were baseless and politicized.
"This is a farcical verdict which strikes at the heart of freedom of expression in Egypt," said Philip Luther, the rights group's director for the Middle East and North Africa.
"Today's verdict must be overturned immediately -- Mohamed Fahmy and Baher Mohamed should be allowed to walk free without conditions. We consider them to be prisoners of conscience, jailed solely for exercising their right to freedom of expression."
Amnesty International also urged the Egyptian authorities to facilitate Fahmy's request for deportation from Egypt to Canada.
Fahmy gave up his Egyptian citizenship in hopes of benefiting from a new law allowing for the deportation of foreign defendants but, unlike in the case of Greste, no presidential decree has been issued for him.