The court found Galliano guilty on two counts of "public insults based on origin, religious affiliation, race or ethnicity" - charges that carry a maximum sentence of six months in prison and fines of up to euro20,000.
But the three-magistrate panel showed leniency, sentencing the legendary designer to a euro6,000 ($8,400) suspended fine, which means it goes on Galliano's criminal record but he does not have to pay it. The court did not give Galliano prison time.
Presiding judge Anne-Marie Sauteraud said the magistrates' clemency was in part due to the fact that the designer had apologized to the court and the plaintiffs - who contended the designer showered them with a litany of racist and anti-Semitic insults in two separate run-ins at a Paris watering hole.
In testimony before the court in proceedings in June, Galliano said he didn't recall anything about the spats and explained he had been under the influence of a "triple addiction" to alcohol, barbiturates and sleeping pills. Still, he added he was sorry for "the sadness that this whole affair has caused."
Lawyers for both sides welcomed Thursday's ruling.
"It is a wise ruling," Galliano lawyer Aurelien Hamelle told journalists outside the courtroom. "Mr. Galliano is clearly relieved ... and asked me to apologize for him once again."
Galliano "is looking forward to a future of forgiveness and understanding, hopefully, and to put all of this behind him."
Yves Beddouk, an attorney representing one of the plaintiffs, said his client, Geraldine Bloch, was "perfectly satisfied."
Although Galliano will not have to fork out any money in fines, he was ordered to pay euro16,500 ($23,200) in court fees for Bloch and two other plaintiffs, as well as five anti-racism associations. The court also ordered him to pay a symbolic euro1 ($1.40) in damages to each.
Moshe Kantor, the president of the European Jewish Congress, denounced the ruling.
"It is outrageous that someone who told others that they 'ought to be dead' and expressed support for the Holocaust gets away with less than a slap on the wrist," Kantor said. "This sentence demonstrates that there appears to be a culture of impunity in the entertainment world."
The Simon Wiesenthal Center, a Jewish human rights organization, said "the symbolic one euro fine by a French court was the right legal punishment for John Galliano's public anti-Semitic outbursts.
"Now it is up to him to make amends to the community he demeaned and to the public at large," according to a statement from the center. "That cannot be achieved through carefully crafted press releases but only through his future deeds and words."
Although Galliano's remarks would not be punishable in the U.S., France has strict laws aimed at curbing anti-Semitic and racist language. The laws were enacted in the decades following the Holocaust.
Galliano did not attend Thursday's ruling, and judge Sauteraud explained his absence as an attempt to keep him out of the media spotlight.
The saga of Galliano's undoing has riveted the fashion industry since allegations surfaced that he accosted a couple at Paris' hip La Perle cafe on Feb 24. The story made headlines worldwide, and soon another woman came forward with similar claims about a separate incident in the same cafe.
Days later, Britain's The Sun tabloid posted a video showing an inebriated Galliano insulting a fellow cafe client, slurring "I love Hitler," among other incendiary remarks.
As the video went viral, the house of Dior took swift action against the man it had long treated as icon, sacking Galliano days before the label's fall-winter 2011 runway show in March. Galliano was also later ousted from his eponymous label, also owned by Dior's parent company.
At his daylong trial in June, Galliano was a shadow of his former self. The man whose proud rooster-like post-fashion show strut had long been a thing of legend appeared stooped and addressed the court in a faltering, barely audible voice.
In his testimony, Galliano was contrite and humble, telling the three-judge panel that he was sorry "for the sadness that this whole affair has caused."
He said he'd kicked his addictions during a stint in a rehab clinic in Arizona and was "feeling much better." He said he'd resorted to the potent cocktail of drugs and alcohol to escape the ever-increasing pressures of the high-stakes fashion industry.
Galliano - a 50-year-old who was born Juan Carlos Galliano to a Spanish mother in the British Iberian enclave of Gibraltar - rejected any suggestion he was fundamentally racist, saying his multicultural-infused work spoke for itself.
His extravagant, theatrical collections culled their inspiration from cultures as far-flung as Kenya's Massai people and the geishas of Japan.
In the wake of the scandal, Galliano was replaced at his signature label by his longtime right-hand man and fellow Briton, Bill Gaytten, in June. Gaytten was behind the Dior haute couture collection presented in July to nearly universally disastrous reviews - though officials at the storied house have stressed he has not been appointed Dior creative director.
Rumors about Galliano's possible successor at Dior have swirled for months, with Lanvin's Alber Elbaz, Givenchy's Riccardo Tisci and Colombian-born star Haider Ackermann emerging as possible contenders. A report last month in Women's Wear Daily cited unnamed sources as saying that New York designer Marc Jacobs was in talks for the plum gig. Neither Jacobs nor Dior or parent company LVMH would comment on the report.
The fashion industry is waiting to see whether Galliano will manage to rehabilitate his image and make a comeback, much as supermodel Kate Moss did after images of her taking cocaine hit newspapers the world over.
Asked by journalists about Galliano's plans, attorney Hamelle said only that his client is "looking forward to the future" and "will continue to care for himself."