In a statement, the court said on Tuesday: "As the only officer present, the accused led and supervised the execution of the reprisal orders.
"The act of revenge, directed exclusively at civilians, was driven first and foremost by revenge but also by anger and hatred."
The court had insufficient evidence to convict Scheungraber for the four shootings, a spokeswoman said.
"At last we are satisfied that the guilt amassed by the accused during the war is being, and will be, atoned for," said Hans-Joachim Lutz, the state prosecutor.
Scheungraber, who spent decades after World War Two as a free man in his home state of Bavaria running a furniture shop, had denied the charges and said he had handed over the individuals in question to the military police.
German media have reported that he regularly took part in marches for fallen Nazi soldiers.
The case is one of Germany's last Nazi trials, alongside the forthcoming case of John Demjanjuk, a suspected death camp guard who was deported from the United States in May to face charges he helped murder nearly 28,000 people during World War Two.
The Simon Wiesenthal Centre, which hunts suspected Nazi war criminals, welcomed the verdict and praised recent efforts by German authorities to bring Nazi criminals to justice.
"The verdict strengthens the view that the long time gap in no ways diminishes the perpetrator's guilt and that age offers no legal protection for the murders," said Efraim Zuroff, the head of the centre's Jerusalem office in a statement.
Scheungraber was convicted in absentia to life in prison on September 28, 2006, by a military tribunal in La Spezia for his part in the Falzano di Cortona massacre.