Navalny shot to prominence during huge anti-Putin rallies in 2011-2012 and last year won strong support in Moscow mayoral elections, polling more than 27 percent of the vote.
Navalny was found guilty of calling municipal lawmaker Alexei Lisovenko "a lawmaker-drug addict" and ordered to pay 300,000 rubles (USD 8,300), an AFP correspondent reported from the Babushkinsky district court in Moscow.
His supporters say the guilty verdict could further deepen Navalny's legal woes and see him jailed.
Navalny's team wrote on his popular blog after Tuesday's court decision that the latest guilty verdict could lead to a ruling turning his suspended sentence into a real one.