Ahmed Khalfan Ghailani, the first Guantanamo detainee to face a civilian trial, has been acquitted in New York City of all but one charge.
Ahmed Khalfan Ghailani, 36, a Tanzanian from Zanzibar, had been accused of conspiring in the 1998 Al Qaeda bomb attacks on U.S. embassies in Kenya and Tanzania that killed 224 people.
But a New York jury found him guilty of one relatively minor charge of conspiracy to damage or destroy U.S. property with explosives after deliberating for five days.
The result will come as a huge setback to Barack Obama's plans for trying terrorism suspects in the United States.
Ghailani faces a mandatory minimum of 20 years in prison and a maximum of life even though he was cleared of 276 murder and attempted murder counts, along with four other conspiracy charges.
It was a rare defeat for the U.S. Attorney's Office in New York, which has a near perfect record in prosecuting terrorism cases.
Ghailani's trial was being watched closely as a test of Obama's approach to handling the 174 terrorism suspects held at Guantanamo Bay, including Khalid Sheikh Mohammed, a self-professed mastermind of the 9/11 attacks.
Obama has vowed to close the US prison at Guantanamo Bay amid international condemnation of the treatment of detainees, but he has run into political resistance at home.
His administration has adopted an approach that favours military tribunals in some cases for terrorism suspects and civilian trials in others.
Justice Department spokesman Matthew Miller said: 'We respect the jury's verdict and are pleased that Ahmed Ghailani now faces a minimum of 20 years in prison and a potential life sentence for his role in the embassy bombings.'
U.S. Attorney Preet Bharara said he would seek life in prison for Ghailani at his sentencing on January 25.
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