A Paris court convicted the Church of Scientology of fraud and fined it more than €600,000 ($900,000) today but stopped short of banning the group as prosecutors had demanded.
The group's French branch immediately announced it would appeal against the verdict.
The court convicted the Church of Scientology's French office, its library and six of its leaders of organised fraud. Investigators said the group pressured members into paying large sums of money for questionable financial gain and used "commercial harassment" against recruits.
The group was fined €400,000 ($600,000) and the library €200,000. Four of the leaders were given suspended sentences of between 10 months and two years. The other two were given fines of €1,000 and €2,000.
However, the court did not order the Church of Scientology to shut down, ruling that it would be likely to continue its activities anyway "outside any legal framework."
Prosecutors had urged that the group be dissolved in France and fined €2 million ($3 million).
The verdict is "an Inquisition of modern times," said Scientology spokeswoman Agnes Bron, referring to efforts to rout out heretics of the Roman Catholic Church in centuries past.
The head of an association that helps victims of sects, Catherine Picard, called the verdict "intelligent."
"Scientology can no longer hide behind freedom of conscience," she said.
The Los Angeles-based Church of Scientology, founded in 1954 by the late science fiction writer L. Ron Hubbard, has been active for decades in Europe, but has struggled to gain status as a religion. It is considered a sect in France and has faced prosecution and difficulties in registering its activities in many countries.
Defence lawyer Patrick Maisonneuve said during the trial that neither the Church of Scientology nor the six leaders on trial had gained financially from the group's practices.
The original complaint in the case dates back more than a decade, when a young woman said she took out loans and spent the equivalent of €21,000 on books, courses and "purification packages" after being recruited in 1998. When she sought reimbursement and to leave the group, its leadership refused. She was among three eventual plaintiffs.
Olivier Morice, lawyer for civil parties in the case, said the verdict was "historic" because it was the first time in France that the Church of Scientology has been convicted of organised fraud.
Investigating judge Jean-Christophe Hullin spent years examining the group's activities, and in his indictment criticised what he called the Scientologists' "obsession" with financial gain and practices he said were aimed at plunging members into a "state of subjection."
The Church of Scientology teaches that technology can expand the mind and help solve problems. It claims 10 million members around the world, including celebrity devotees Tom Cruise and John Travolta.
Belgium, Germany and other European countries have been criticised by the US State Department for labeling Scientology as a cult or sect and enacting laws to restrict its operations.