Umran Javed, 27, led a crowd in chants of "Bomb, bomb, Denmark. Bomb, bomb USA" during protests in February 2006 against the publication of cartoons depicting the Prophet Muhammad.
Javed, of Birmingham, was recorded on police video and arrested l
ater, said David Perry QC, prosecuting at the Old Bailey.
Javed was found guilty of soliciting murder and stirring up racial hatred, and remanded in custody for sentencing in April. There were protests from the public gallery as the verdicts were returned.
Mr Perry said the demonstration on 3 February last year was to protest about the cartoons printed in Denmark and reproduced in some European countries. He said Javed used a loudhailer to address around 40 people outside the Danish embassy in Knightsbridge.
"He appeared to be one of the leaders," said Mr Perry. "He addressed the crowd in terms which encouraged killing and incited racial hatred."
Javed had continued with his speech as the crowd was joined by up to 300 other Muslims who had marched from the central mosque in Regent's Park.
He condemned the cartoons as dishonouring Muhammad and accused non-believers of "declaring war against Islam and the Muslim community", said Mr Perry.
"He said disbelievers would pay a heavy price ... and said Denmark would pay with blood."
Mr Perry said the case was not about freedom of assembly or freedom of speech and claimed the words used were plainly criminal.
Javed told the jury: "I regret saying these things. I understand the implications they have but they were just slogans, soundbites. I did not want to see Denmark and the USA being bombed."
His trial was one of several involving demonstrators arrested following the protest.
Outside court, Muslim Anjem Choudary, a former spokesman for the now banned al-Muhajiroun organisation, said: "I am not surprised at all. Muslims are demonised and vilified.
"We have peaceful demonstrations, and then slogans that have been used normally are taken out of context.
"This is a failure of capitalism, of democracy and the freedom of speech. Muslims are treated as second-class citizens and we can't get a fair trial."
But Sue Hemming, head of the Crown Prosecution Service counter terrorism division, said: "Free speech is an important aspect of a democratic society.
"However, when we examined Mr Javed's speech there was direct encouragement to those present and those watching via the media to commit acts of murder against the Danes and Americans.
"The law also makes it clear that free speech should not be misused to insult, abuse or threaten people in such a way that it will stir up racial hatred.
"Given the context in which Mr Javed's speech was delivered, it was plain that racial hatred was intended or the likely result."
The shadow home secretary, David Davis, later said: "While Britain is a tolerant society, it should never tolerate threats of violence or death from any quarter under any circumstance."
Liberal Democrat home affairs spokesman Nick Clegg said: "This is a sound, strong judgment. There is simply no justification, under any circumstances, for such callous incitement to hatred and violence."
