Ali Ghufron, alias Mukhlas, was "proven guilty of planning a terrorist action ... and we, the judges, sentence him to death," Judge Cokorda Rai Suamba said.
Ghufron is the third defendant in the case to be sentenced to death for the Oct. 12 attack that killed 202 people, mostly foreign tourists. Sixteen others have received prison terms ranging from seven years to life.
The verdict is the latest sign that Indonesia is serious about confronting the threat of Islamic militancy, and that its legal system is capable of punishing them. In contrast to neighboring Malaysia and Singapore, which have used draconian internal security laws to lock up hundreds of suspects, Indonesia has insisted on bringing them to trial.
Ghufron is the last of four lead suspects to be tried in connection with the near-simultaneous bombings of two nightclubs and the U.S. consulate that shattered the peace in one of the world's premier tourist islands.
Ghufron reacted calmly to the ruling and told the judges that he would appeal.
"The verdict is not in line with Islamic teachings," he said before the judges closed the hearing.
During the trial, Ghufron admitted to having been the operations chief of Jemaah Islamiyah — the al-Qaida-linked extremist group accused in the Bali bombings. He has also admitted to traveling to Afghanistan in the 1980s and fighting alongside Osama bin Laden.
Two of the militants, including Ghufron's brother Amrozi bin Nurhasyim, have already been sentenced to death and a third to life behind bars. Fifteen others have received prison terms ranging from seven years to 16 years.
Ghufron was charged with overseeing planning meetings for the attack.
During the trial Ghufron showed no remorse for the attacks and, like other Bali suspects, used court appearances to attack the United States.
He has called President Bush a terrorist and said the Bali bombings — the bloodiest terrorist atrocity since the Sept. 11, 2001, attacks in the United States — were carried out to avenge the suffering of Muslims at the hands of America and Israel.
Death sentences in Indonesia are rare, but are allowed under a new anti-terror law adopted in the wake of the Bali attack. They are carried out by a firing squad of 15 paramilitary policemen.
"Mukhlas and the other terrorists are the lowest form of life," said Ashley Stenyer of Victoria, Australia, who was in one of the clubs when it was bombed and had traveled to Bali to attend the trial.
"But I don't think he should have got the death penalty. I want to see all these defendants in jail for the rest of their lives," Stenyer said.
The Bali attack was reportedly part of a Jemaah Islamiyah campaign to destabilize Indonesia and pave the way for an Islamic state across Southeast Asia. The network's alleged commander, Riduan Isamuddin Hambali, was captured last month in Thailand and is now in U.S. custody.
Jemaah Islamiyah also is accused of directing the Aug. 5 car bombing of a U.S.-owned hotel in Jakarta which killed 12 people. At least a dozen suspects have been arrested but none have been formally charged.
The group's alleged spiritual leader, Abu Bakar Bashir, was sentenced last month to four years in prison for sedition. But he was acquitted of heading Jemaah Islamiyah, a ruling greeted with dismay by Western governments.