At least 19 others were convicted of treason and sentenced to between 10 and 20 years for their involvement in the protest, court officials said.
Aides described Yudhoyono as being "livid" over the flag-waving incident.
Indonesia's military blamed the National Intelligence Agency (BIN) for not anticipating the incident, while military and police chiefs in the province offered to resign.
The outlawed South Maluku Republic (RMS) group, which was behind the flag-waving protest, emerged in the 1950s soon after Indonesia won its independence from Dutch colonial rule.
Indonesian military forces defeated the group, which was mostly Christian but had some Muslim members, and its leadership fled to the Netherlands.
It was largely forgotten until the eastern province of Maluku erupted in Muslim-Christian violence in 1999 that killed an estimated 9,000 people.
The Muslims labelled their Christian foes as separatists, a charge that helped give their cause legitimacy among the country's mostly Muslim leadership and media.
An overwhelming majority of Christians in the province insist they do not
want a separate state.
Government-sponsored peace talks in the region in 2002 failed to end the violence, and sporadic clashes persist.