The judge said in the verdict that the three band members "committed hooliganism driven by religious hatred" and offended religious believers.
The trio were arrested in March after a guerrilla performance in Moscow's main cathedral calling for the Virgin Mary to protect Russia against Vladimir Putin, who was elected to a new term as Russia's president two weeks later.
Russian police have rounded up pro-Pussy Riot protesters, including the former world chess champion Garry Kasparov and leftist opposition group leader Sergei Udaltsov after one of the most closely watched court cases in recent Russian history.
Hundreds of Pussy Riot supporters filled a narrow street outside the court where the verdict was delivered, chanting "Russia without Putin!" amid a heavy police presence.
The case has attracted international attention as an emblem of Russia's intolerance of dissent. It also underlines the vast influence of the Russian Orthodox church. Although church and state are formally separate, the church sees itself as the heart of Russian national identity and critics say its strength effectively makes it a quasi-state entity.
Celebrities including Paul McCartney, Madonna and Björk have called for the women to be freed and protests timed for just before the verdict or soon afterward were planned in more than three dozen cities worldwide.
Prosecutors had asked for three-year sentences, and Putin said he hoped the sentencing was not "too severe".
Before Friday's proceedings began, the defense lawyer Nikolai Polozov said the women "hope for an acquittal but they are ready to continue to fight".
The case has come after several laws were passed to crack down on opposition, including one that raised the fine for taking part in unauthorized demonstrations 150-fold to 300,000 rubles (about £6,000). Another measure requires non-government organizations that engage in vaguely defined political activity and receive funding from abroad to register as "foreign agents".
Intellpuke: I fail to see any justice in this verdict - the punishment far exceeds the alleged "crime".
You can read this article by Guardian Russia Correspondent Miriam Elder, reporting from Moscow, with reporting by various news agencies, in context here: www.guardian.co.uk/music/2012/aug/17/pussy-riot-sentenced-two-years