Mamdouh Mahmud Salim entered the plea in U.S. District Court in Manhattan before Judge Deborah A. Batts.
Salim had been scheduled to go on trial next week on charges that he maimed the guard in November 2000 as part of a wider plot to take hostages and win the release of other prisoners at the Metropolitan Correctional Center.
Salim, 45, entered the guilty plea to charges of conspiracy to murder and attempted murder. The charges carry a penalty of life in prison plus 20 years.
At the time of the attack on Correction Officer Louis Pepe, Salim was awaiting trial on other conspiracy charges in the August 1998 bombings of two U.S. embassies in Africa. Those charges against him are still pending and are not covered by his plea. The attacks killed 224 people, including 12 Americans.
"I've never been in court. I've never been in prison, I've never been charged with any crime before in my life," Salim told the judge.
Batts closed the proceeding to the public when Salim described the crime because she said there was a possibility that the plea would not be accepted and she didn't want his statement to prejudice a potential jury. She reopened the courtroom afterward, and said, "I accept your guilty plea and judge you guilty."
The episode left Pepe, stabbed through the eye with a sharpened comb, with permanent brain damage. Prosecutors have said that Salim was aided in the assault by Khalfan Khamis Mohamed, who was convicted in the embassy bombings trial.
Prosecutors have portrayed Salim as one of Osama bin Laden's most loyal followers, and as a founding member and finance chief of al Qaeda.
They say that Salim, while running front companies for al Qaeda that purchased weaponry, once tried to buy uranium to build a nuclear bomb.
Before his arrest in the 1998 bombings, Salim had opened several bank accounts in Germany, where investigators suspect three of the Sept. 11 suicide hijackers were recruited and financed by a terrorist cell.