Capt. Rogelio "Roger" Maynulet, a 30-year-old from Chicago, stood at attention as the verdict was read.
The court was to reconvene later Thursday to consider Maynulet's sentence. The charge — assault with intent to commit voluntary manslaughter — carries a maximum of 10 years in prison.
Prosecutors had sought a conviction on a more serious charge of assault with intent to commit murder that carried a 20-year maximum.
Maynulet told the court Wednesday that his shooting of an unarmed Iraqi wounded in a chase was "honorable" and "the right thing to do."
He was found guilty in the May 21, 2004, killing near Kufa, south of Baghdad. He had pleaded not guilty.
Taking the stand for the first time Wednesday, Maynulet described his company's mission and the events that led him to fire twice upon the Iraqi, maintaining that the man was too badly injured to survive.
"He was in a state that I didn't think was dignified — I had to put him out of his misery," Maynulet said. He argued that the killing "was the right thing to do, it was the honorable thing to do."
Prosecutors at the court-martial said Maynulet violated military rules of engagement by shooting an Iraqi who was wounded and unarmed.
Maynulet's 1st Armored Division tank company had been on patrol near Kufa when it was alerted to a car thought to be carrying a driver for radical cleric Muqtada al-Sadr and another militiaman loyal to the Shiite cleric.
They chased the vehicle and fired at it, wounding both the passenger, who fled and was later apprehended, and the driver. The killing was filmed by a U.S. drone surveillance aircraft.