Madikizela-Mandela — whose financial adviser, Addy Moolman, also was convicted — could be sentenced to 15 years in jail.
The trial marked the latest setback for Madikizela-Mandela, who had played a role in the nation's successful anti-apartheid campaign led by Nelson Mandela.
Madikizela-Mandela, 64, and Moolman sat next to each other as Magistrate Peet Johnson read his verdict for two-and-a-half hours.
He said Madikizela-Mandela had not been honest to the court and that her evidence that she did not know about the fraud was "totally improbable." On the theft charges, Johnson said she was an accomplice to Moolman.
Madikizela-Mandela and Moolman had both pleaded innocent to 60 charges of fraud and 25 of theft involving $120,000 at the African National Congress Women's League, which Madikizela-Mandela leads.
The prosecution said letters on organization stationery that bore Madikizela-Mandela's signature were used to fraudulently obtain bank loans in the name of bogus employees, including her daughter, Zinzi.
The theft charges relate to money deducted from the bank accounts of loan applicants for a funeral policy that the prosecution says did not exist.
Concluding her testimony last month, Madikizela-Mandela said she signed the documents, handed to her by her secretary, without checking them.
Outside the court, Madikizela-Mandela was met by a group of about 30 students, chanting "Viva Winnie viva," with raised fists. She smiled at the group and raised her fist in return.
One young man who did not wish to be identified said he was disappointed by the judgment and claimed the African National Congress had deserted Madikizela-Mandela. He said all she had been trying to do was help the poor.
"I don't think she deserves this type of treatment," he said.
The trial started in July 2002, and proceeded in fits and starts, with 23 witnesses testifying for the state.
On Thursday, Madikizela-Mandela was convicted of 43 counts of fraud and 25 of theft, while Moolman was found guilty of 58 counts of fraud and 25 of theft.
Madikizela-Mandela is still known to her supporters as "the mother of the nation," even though she also was convicted in 1991 of kidnapping and assault, and sentenced to six years in prison. Her appeal saw the sentence reduced to a fine.
Nevertheless, she has been sharply criticized by the African National Congress party, which leads the country.
Winnie Mandela and Nelson Mandela separated in 1992 and were formally divorced in 1996.