The ruling, shown on the state-run Al-Iraqiya television channel, is the fourth time that Majid, better known by his macabre nickname, has received a death sentence. It is not known when he will finally be executed.
His execution has previously been held up by legal wrangling. The first conviction was due to have been carried out by October 2007 but delayed so as not to coincide with the Muslim holy month of Ramadan.
The hanging was also deferred because it needed approval from Iraq's three-member presidential council.
Judge Abud Mustapha al-Hamani branded Majid's offences as "deliberate murder, a crime against humanity" when the verdict was delivered amid muffled applause in the courtroom.
"Al hamdulillah, Al hamdulillah (praise be to God)," said Majid, who stood stone-faced in the dock in a traditional black- and gold-coloured Arab robe and black and white keffiyeh headdress, before the broadcast ended abruptly.
Three-quarters of the victims at Halabja were women and children, in what is thought to be the deadliest ever gas attack carried out against civilians.
"I am so happy at this verdict and I really would like to see him executed in front of my own eyes," said Shurnam Hassan, 45, who lost her husband and two sons in the attack.
Dozens of people gathered at a cemetery in Halabja following the verdict where they played music and cheered in celebration although their joy was not unreserved.
"I am happy at the decision but I am sad also as the court did not consider his crime to be genocide, as we did," said Omeed Hamaa Ali, 37, a Halabja resident who lost his mother, three brothers and three sisters in the gassing.
Three other men were also convicted for their role in the Halabja attacks.
Sultan Hashem Ahmed, a former defence minister, and Saber Abdul Aziz Hussein al-Duri, an ex-intelligence chief, were sentenced to 15 years in jail. Farhan Mutlak al-Juburi, a former Iraqi army chief, was ordered to serve 10 years.
A close cousin of Saddam, Majid earned his moniker for ordering poisonous gas attacks in a brutal scorched-earth campaign of bombings and mass deportations that killed an estimated 182,000 Kurds in the 1980s.
He had already been sentenced to hang for genocide over the Kurdish offensives when in December 2008 he received a second death sentence for war crimes committed during the ill-fated 1991 Shiite uprising in southern Iraq.
Last March, the Iraqi High Tribunal handed down a third death sentence over the 1999 murders of dozens of Shiites in the Sadr City district of Baghdad and in the central shrine city of Najaf.
Majid was the King of Spades in the pack of cards of most wanted Iraqis issued by the US military in 2003 and was arrested in August of that year.
However, he is probably best known for the Halabja attack when in March 1988, Iraqi jets swooped over the small town and for five hours sprayed it with a deadly cocktail of mustard gas and the nerve agents Tabun, Sarin and VX.
Considered Saddam's right-hand man and bearing a strong resemblance to the former dictator, he was a member of the decision-making Revolutionary Command Council and regularly called upon to wipe out rebellion.
In March 1987, the ruling Baath party put him in charge of state agencies in the Kurdish area, including the police, army and militias.
As Iraq's eight-year war with Iran drew to a close the following year, fighters from the rebel Patriotic Union of Kurdistan, with backing from Tehran, took over the farming community of Halabja, near the border.
As Saddam's enforcer, he ordered the gas attack to crush the uprising. Majid said he took action against the Kurds, who had sided with Iraq's enemy in the war, for the sake of Iraqi security and has refused to express remorse.
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