The court in the French Riviera town of Grasse found Pierre and Danielle Le Guennec guilty of possessing stolen goods, after a trial that made headlines in France and abroad.
The works have been seized by authorities and will be returned to the Picasso Administration, which represents the artist's heirs.
There has been no value placed on the collection.
Prosecutors had called for the couple to receive a five-year suspended jail sentence.
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"Picasso had total confidence in me. Maybe it was my discretion," Le Guennec told the court.
"Monsieur and Madame called me 'little cousin'."
He said that one day, Picasso's wife Jacqueline came up to him and gave him a box with the 271 works inside, saying "this is for you."
When he got home, he found what he described as "drawings, sketches, crumpled paper."
He went to Paris the following year to get the works authenticated at the Picasso Administration, but the artist's heirs promptly filed a complaint against him.
"I never could see how anyone could swallow that," said one of the artist's children, Maya Widmaier-Picasso.
"It's like going to the bakery for a baguette and he gives you 271," she told the court.
During the trial, all 271 works, created between 1900 and 1932, were beamed onto a giant screen in respectful silence.
Other more intimate works also graced the collection, including portraits of his mistress Fernande, drawings of his first wife Olga or a drawing of a horse for his children.
A lot of the evidence during the trial centred around why none of the works were signed, with several witnesses saying the artist would sign everything -- partly to ensure against theft.