The verdict is the latest legal case to hamper an opposition movement struggling to break Prime Minister Hun Sen's 32-year grip on power.
The defamation charge centred around the brazen daylight murder of political commentator Kem Ley in July, whose killing sent shudders through Cambodia's hard-pressed rights community.
Many feared the assassination was orchestrated by forces loyal to Hun Sen, who has been cracking down on critics ahead of elections in 2018.
Former opposition leader Rainsy, Hun Sen's top foe, called Kem Ley's murder an act of "state terrorism" and said "the government was behind the assassination."
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Today, a Phnom Penh court sentenced Rainsy to 20 months in jail in absentia, with Judge Y Thavrak declaring him guilty of "public defamation and inciting unrest".
The exiled politician, who resides in France, faces a string of convictions and charges he claims are politically motivated and stepped down as leader of his Cambodia National Rescue Party (CNRP) last month.
The move was an effort to evade new legislation pushed by Hun Sen's government that bars convicts from leading political parties -- seen as a clear shot at Rainsy and the CNRP.
The killer claimed he shot the popular commentator over USD 3,000 in unpaid debt -- a motive that has failed to sway many in a country with a dark history of political assassinations.
Rights groups say Hun Sen has been heaping pressure, mostly through the courts, on his rivals ahead of local elections in June this year and a general election in 2018.
The CNRP made huge gains in the 2013 elections and say they only lost because the vote was stolen -- a claim Hun Sen denies.