All eight members of the squad were initially charged with murder and kidnapping.
Magincalda was accused of being part of a four-man "snatch team" that seized the victim from his home, but not accused of firing any shots in the April 26, 2006 slaying.
His defence lawyers argued that Magincalda was a religious man who wanted no part in the conspiracy and had told his squad mates he would not shoot anyone.
According to prosecutors the squad hatched a plan during a night patrol to kidnap and kill a suspected insurgent from his house.
When they could not find him, the marines dragged a neighbour to a hole and shot him, leaving an AK-47 and a shovel with his body to make him look like a fighter, prosecutors said.
A separate jury on Wednesday continued deliberations in the case of the squad leader, Sergeant Lawrence Hutchins, 23, who the prosecution has said is the ringleader.
In his defence, Hutchins's lawyers said his act was a result of poor leadership by his officers who approved the use of violence in capturing and interrogating suspects.
In July, another defendant, Corporal Trent Thomas, was acquitted of murder despite testimonies from several of his former squad members that he helped kidnap and shoot the man.
Thomas was convicted of kidnapping and conspiracy instead, had his rank reduced to private and was given a bad-conduct discharge, but no jail term.
Four lower-ranking marines and a navy corpsman also cut deals with prosecutors in exchange for their testimony and received sentences ranging from one to eight years in prison.