Orlov said: "I consider this our victory because the court to a large degree became a discussion about the guilt of Ramzan Kadyrov. I consider we convincingly proved this guilt.
"We will continue to talk about this in courts at various levels."
Moscow's Tverskoi district court ordered Memorial to pay Kadyrov $1,677 (50,000 roubles) in symbolic damages and Orlov an extra $670.9, far less than the $316,100 demanded by Kadyrov.
It said Orlov should publish a retraction within 10 days.
Kadyrov welcomed the verdict, saying he had had no choice but to take the matter to court.
"What is important is that it has been stated in court that Orlov was wrong," Interfax news agency quoted him as saying.
Orlov had made his accusations against Kadyrov on Memorial's website after the killing.
In 2007, Estemirova was awarded the Anna Politkovskaya prize - named after the murdered Russian journalist - by the Nobel Women's Initiative, a group established by female Nobel Peace Prize laureates.
'Climate of fear'
Memorial's lawyers said Kadyrov had created a climate of fear in Chechnya and had threatened to kill his enemies, including rights workers.
But they did not present direct evidence of any involvement by Kadyrov in the murder.
Andrei Krasnenkov, a lawyer for the Chechen leader, dismissed the evidence as "hearsay".
He said Kadyrov was also in the process of suing opposition newspaper Novaya Gazeta
for 10 million roubles over a series of articles that accused him of torture and extra-judicial killings.
Orlov said this was part of a campaign to silence critics in the media.
"Already a large number of journalists are afraid of writing about him," he said.
Opponents accuse Kadyrov of rights violations in Chechnya, the scene of two separatist wars with Russia in the 1990s, and of tolerating no independent voices in the region.
Kadyrov rejects the charges.
He has amassed enormous personal influence in the region and some analysts say this could eventually pose a renewed threat to Kremlin control.