The sentencing comes less than two weeks after another government critic, Yang Chunlin, was jailed five years on similar charges.
The verdict against Hu, 34, also comes amid international pressure over the Chinese government's handling of a crackdown on more than three weeks of unrest in Tibet.
The ruling drew criticisms from the international community and human rights groups who said China has regularly used the subversion of state power charge as a tool to silence critics.
Rights groups said Beijing officials were using Hu, one of China's most active rights activists, as a scapegoat in a campaign to silence dissent ahead of the world's biggest sporting event.
His wife, Zeng Jinyan, 24, who recently gave birth to their first child and herself a prominent rights activist, said the verdict was the culmination of four years of harassment by authorities.
"He's been under surveillance, been kidnapped. He's been put under house arrest and now they have sentenced him to three and a half years.
"This is irrational and unfair," she said outside the courthouse, breaking down in tears.
Hu's mother, who did not want to give her name, said her son was innocent of subversion.
"The evidence they had was six articles posted on the internet. I cannot figure out how this is inciting subversion of the government," she said.
"Hu Jia will never regret what he did. I am very proud of what my son has done. He was found guilty of speaking his mind."
Li Fangping, the activist's lawyer, said the verdict was unjust and described the sentence as "unacceptable".
"The evidence was publishing articles in and outside of China and accepting interviews with the foreign press," Li said outside the court, adding that he would advise Hu to file an appeal.
In an immediate response, the US said the charge against Hu was "specious" and called on China to improve its record on human rights ahead of the Beijing Games in August.
Susan Stevenson, the embassy spokeswoman in Beijing, said the US was "dismayed" by the verdict.
"In this Olympic year, we urge China to seize the opportunity to put its best face forward and take steps to improve its record on human rights and religious freedom," she told the AFP news agency.
The European Unionalso criticised the verdict and called for Hu's immediate release.
Speaking to AFP, William Fingleton, the bloc's spokesman in Beijing, said Hu should never have gone on trial.
"We said very clearly before the trial that he should not have been detained in the first place and that he should be released, and this remains our position."