The court called for an officer involved in covering up the circumstances of the 1971 death to be investigated as an accessory to murder.
The packed courtroom in Pretoria burst into applause after the judge delivered a damning indictment of how police treated those who opposed white-minority rule.
Ahmed Timol, a 29-year-old campaigner against apartheid, was arrested in Johannesburg in October 1971.
After five days in detention, he died after plummeting from the city's police headquarters.
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But his family fought the ruling for decades and campaigned to secure the legal review, which finally began in June.
"Timol did not jump out of the window but was pushed out of the window or off the roof," said judge Billy Mothle, reading a summary of his 129-page judgement.
"Members of the security branch... murdered Timol."
The judge called for security branch officer Joao Rodrigues, who admitted helping cover up the murder, to be prosecuted.
"Most of the main perpetrators have since passed on (but) all security branch officers responsible for guarding and interrogating Timol are collectively responsible for his injuries," said Mothle.
Members of the South African Communist Party to which Timol belonged who were present in court shouted "Viva Ahmed Timol!" as the judge adjourned the hearing and the public gallery burst into applause.
"Judge Billy Mothle delivered a fine -- a superb -- judgement," said Salim Essop who was arrested, detained and tortured alongside Timol in 1971.
"He concluded that the police were responsible for his death... they did have the risk of killing him by torturing him and in that respect they were responsible for his murder."
Between 1963 and 1990, human rights activists say 73 people died in police detention, sometimes in circumstances strikingly similar to Timol.