"The Public Prosecution produced evidence that the accused had called in public speeches for a demonstration to confront public security personnel, inciting violence and escalation against law enforcement officers, resulting in deaths during those confrontations," Prosecutor Mohamed Hazza said.
In a separate case involving comments made on social media site Twitter, a judge delayed issuing a verdict against Rajab's appeal until Aug. 23.
Bahrain has experienced near-daily protests since February 2011, following an uprising by the kingdom's Shiite majority seeking greater political rights from the Western-backed Sunni monarchy. At least 50 people have died in the unrest and hundreds have been detained, including prominent rights activists and Shiite opposition leaders.
Shiites account for about 70 percent of Bahrain's population of just over half a million people, but claim they face widespread discrimination and lack opportunities granted to the Sunni minority. The country's leaders have offered some reforms including restoring jobs for many Shiites pushed out from their posts at the start of the uprising and giving parliament more power.
But the opposition says they fall short of Shiite demands for a greater voice in the country's affairs and an elected government.
The unrest has put Washington into an awkward position. U.S. officials have called for efforts to reopen political dialogue in Bahrain, but are careful not to press too hard against the nation's leadership and possibly jeopardize their important military ties.
Rights groups said the verdict raises questions over whether the regime is serious about reforms. The groups have called for his immediate release.
"It seems Bahrain's rulers are far more comfortable with harsh repression than with the reforms King Hamad keeps promising," said Joe Stork, deputy director of Human Rights Watch's Middle East and North Africa division. "The government has yet to show that Nabeel Rajab did any more than exercise his right to free expression and peaceful assembly. He should be set free, not sent away from his family to prison."
"By not releasing the political detainees, including key figures and leaders, the regime is refusing the political solution to the crisis and is practicing an irresponsible obstinacy," it said in a statement.
"There should be no political detainees behind bars," it continued. "They are prisoners of conscience and the regime has no right to continue to hold them as hostages as part of its security solution to the ongoing political crisis. The arrogant adoption of security measures is more destructive to society."
Late Thursday, security was tight across Manama including around the U.S. Embassy and other diplomatic compounds. Protesters burned tires on several main roadways and clashes between riot police and protesters were reported in some Shiite neighborhoods.