Drabinsky was sentenced Wednesday to seven years in prison. Gottlieb received a six-year jail term.
"Corporate fraud such as this results in tangible losses to employees, creditors and investors," Ontario Superior Court Justice Mary Lou Benotto said in her ruling.
"It also results in less tangible, but equally significant loss to society. It fosters cynicism. It erodes public confidence in financial markets."
Lawyers for both men said they would appeal the convictions and the sentences.
Drabinsky and Gottlieb, meanwhile, were released on bail.
Live Entertainment Corporation of Canada, or Livent as it is also known, became North America's premier theatre production company in the 1990s by producing a string of hits in Canada and on Broadway in New York.
These included "Kiss of the Spider Woman," "Phantom of the Opera," "Joseph and the Amazing Technicolor Dreamcoat," "Ragtime" and a revival of "Show Boat."
Drabinsky quickly became a star in the entertainment sector, garnering an Order of Canada for his efforts.
However, it was discovered after Livent was sold to American investors led by former Disney executive Michael Ovitz in 1998 that all was not as it seemed.
The new owners discovered the firm was actually in serious financial trouble. Within months, Livent was bankrupt.
Both Drabinsky and Gottlieb accused underlings of manipulating Livent's financial statements without their knowledge. But the judge dismissed this defense.
Drabinsky and Gottlieb also face a 1998 fraud indictment in New York and Ontario Securities Commission charges.
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