Considered Azerbaijan's most prominent critical journalist, Ismayilova, 39, served as bureau chief for the local service of the US-funded Radio Free Europe/Radio Liberty network between 2008 and 2010.
"Baku's Court for Serious Crimes sentenced Khadija Ismayilova to seven and a half years in prison for economic crimes, including illegal entrepreneurship and tax evasion," her lawyer Fariz Namazly told AFP.
"We will appeal the illegal verdict," he added.
Held in pre-trial detention since December, Ismayilova had denounced her prosecution as politically motivated and an attempt to stop her critical reporting.
In her final statement to the court on Monday, Ismayilova vowed the authorities "won't be able to force me to stay silent, even if they sentence me to 15 or 25 years."
Ismayilova's mother Elmira Ismayilova, who was present in the courtroom on Tuesday, told AFP: "Khadija said she is strong enough to bear everything as she fights for a right cause."
Human Rights Watch called the verdict "outrageous" and said it "shows the Azerbaijani authorities' willingness to subvert the law to exact revenge against critics.
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