Sergeant Lawrence Hutchins, 23, was found guilty of killing Hashem Ibrahim Awad on 26 April 2006 in the town of Hamdania, north of Baghdad.
Hutchins was sentenced by a military court at a Marine base of Camp Pendleton.
He was acquitted of kidnapping, assault, housebreaking and obstruction of justice in the death of Mr Awad.
The court stated that Hutchins led seven servicemen in the plot to kidnap Mr Awad from his home after failing to capture a local insurgent leader.
He was also accused of coming up with the idea of staging the scene, with a stolen shovel and AK-47 rifle placed by the victim's body, to make it look as though he had been digging a hole to plant a roadside bomb.
Sentencing will take place at a later date.
