The court in the Mediterranean city of Alexandria issued its sentence after receiving approval from the mufti, the official interpreter of Islamic law whose role is advisory.
The verdict can be appealed.
Adel Abu al-Nur el-Sayed, 50, was accused of killing 61-year-old Youssef Lamei, a Coptic Christian, on January 2 in Alexandria.
Sayed had walked up to Lamei as he sat outside his liquor store and slit his throat, the victim's son Tony Youssef, who witnessed the murder, told AFP.
Consumption of alcohol is forbidden in Islam.
Sayed was present in court today, according to a security official.
The Coptic minority has been on edge after a series of attacks.
On December 11, a suicide bombing claimed by the Islamic State group struck a Cairo church during a service, killing 29 people.
The group's Egypt branch said in December it would continue attacks against "every infidel and apostate in Egypt, and everywhere".
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