Alexei Navalny has been found guilty of embezzlement, Russian media report.
A judge was still reading the verdict in the city of Kirov, but news agencies said it was clear in his remarks that the Russian leading opposition leader had been convicted.
Even a suspended sentence would bar the outspoken critic of President Vladimir Putin from running for president in 2018.
Alexei Navalny, 40, has denied the accusations, saying the case is politically motivated.
The European Court of Human Rights ordered a retrial after it said he was not given a fair hearing in the first trial, in 2013.
Alexei Navalny is known for his anti-corruption campaign, which targeted senior officials close to the Kremlin. He says the case is an effort to keep him out of politics.
He has recently stepped up his political activity after announcing plans last year to run for the presidency in 2018. President Putin is allowed by the constitution to run for a second consecutive six-year term, but he has not said yet if he plans to run.
Alexei Navalny’s rise as a force in Russian politics began in 2008 when he started blogging about alleged malpractice and corruption at some of Russia’s big state-controlled corporations.
He described Vladimir Putin’s United Russia as “the party of crooks and thieves”, a phrase that stuck among many in Russia.
Alexei Navalny stood for Moscow mayor in 2013 and got more than a quarter of the vote, a surprise for many.
In the first trial, in 2013, Alexei Navalny was found guilty of heading a group that embezzled timber worth 16 million roubles ($500,000) from the Kirovles state timber company while working as an adviser to Kirov’s governor, Nikita Belykh.
Alexei Navalny had described the rerun of the trial as an “exact copy” of the original proceedings, and said he was sure he would be found guilty once again.