Thai Rak Thai's rivals, the Democrat Party, were cleared of similar charges and escaped a threatened dissolution.
Speaking after the verdict Thaksin, who now resides in London, asked his supporters to remain calm and respect the court's ruling.
He urged them to accept the disbanding of his party and the five-year political ban on its top leadership.
"We have to respect the rules of the game. That is, the rule of the law"
Thaksin Shinawatra, ousted Thai prime minister
"As party leader, I humbly accept the ruling and I want to urge the [Council for National Security] and government to hold general elections as soon as possible," Thaksin said in a statement read out by his lawyer in Bangkok.
Before the ruling Thaksin told supporters to "respect the rules of the game" and "the rule of the law".
The government meanwhile has announced a nationwide security clampdown for an indefinite period, placing thousands of soldiers on alert and beefing up deployments at police checkpoints.
Sonthi Boonyaratglin, the general who led last September's coup, said the situation was "totally under control" and authorities were monitoring Thaksin associates and "hardcore" loyalists for possible trouble.
"Security measures have been stepped up since last night and will gradually be increased," Sonthi told AFP. "The measures will be in place for a long time."
The military-backed government has promised to hold elections at the end of the year after a new constitution is promulgated.
Surayad Chulanont, the military-installed prime minister, has reiterated an earlier warning that he would impose a state of emergency to quell any unrest.
The ruling, which cannot be appealed, held Thai Rak Thai had used "parliamentary elections only as a means to achieve totalitarian power" and disregarded the rule of law.
The court's decision drew a mixed reaction, with some analysts saying it was likely to "deepen confrontation" between the military-led government and the masses.
"Thai Rak Thai commanded a large rural electorate and if they don't win them over and fill that political vacuum, there will be trouble," said Thitinan Pongsidhirak, a political scientist at Bangkok's Chulalongkorn University.
"The resistance might be quiet but it will also be deep-seated and strong," he added.
But other analysts said Thai politics was entering uncharted waters, and the ensuing uncertainty could be used by any party to gain power.
"A lot could happen at this point... the process of bargaining may change and things may be quite different from what people expect," said Chris Baker, a veteran analyst and author on the country's politics.
He said it was difficult to predict too far into the future of Thai politics.
"There is not a lot for any party to gain from violence at this point," he added.
"If anything, it will strengthen the grip of the military."