text: Navalny had denied the charges, saying the trial was politically motivated.
  The 37-year-old had been a leading campaigner against President Putin's United Russia party, and regularly blogged about corruption allegations.
  The EU said the verdict posed "serious questions" about the state of Russian law. The US said it was "deeply disappointed".
  Before he was handcuffed and led away, Navalny urged his supporters to continue his anti-corruption struggle, tweeting: "Don't sit around doing nothing."
  Navalny has previously said he would like to stand for president one day.
  He had recently registered his candidacy for the next mayor of Moscow, but his campaign team said that after the verdict he was withdrawing from the race, and called on his supporters to boycott the vote.
  By Oleg BoldyrevBBC News, Kirov
  Minutes after Judge Blinov started reading from the substantial sheaf of papers, it became evident the two defendants, Alexei Navalny and Pyotr Ofitserov, were going to be found guilty.
  Seasoned observers of this trial were just about able to pick up the judge's words. Others were bewildered by the hum-like reading.
  Entering the courtroom just before the verdict reading started, both defendants were far from gloomy. "Why sad faces?" quipped Navalny, walking past dozens of journalists and a row of cameras.
  Navalny has long acquired the skill of tweeting and blogging while interminable financial documents were read by prosecution, defence and, now, judge.
  Publishing his fiery comments on politics, corruption and the need to unite in opposition to Vladimir Putin's regime - that's one of the many things he won't be able to do from behind bars, waiting for the sentence to be appealed against.
  'Explosion of anger'
  The BBC's Moscow correspondent Daniel Sandford says that when the sentence was handed down, there were tears from Navalny's supporters and an explosion of anger on the social networking sites that he has used so effectively.
  Anti-Putin activist and former cabinet minister Boris Nemtsov told reporters the trial was "completely fabricated from start to finish, and even the judge could not say what the reason for the crime was".
  Other countries have also voiced their concern at the verdict. The US ambassador to Moscow, Michael McFaul, said: "We are deeply disappointed in the conviction of Navalny and the apparent political motivations in this trial."
  A spokesperson for the EU's top foreign policy official, Catherine Ashton, said the embezzlement charges were unsubstantiated, and that Navalny's jailing posed "serious questions as to the state of the rule of law in Russia".
  French foreign ministry spokesman Philippe Lalliot added his concern, but said: "We note that not all judicial remedies have been exhausted and that the sentence could be reviewed on appeal."
  Navalny's supporters in Moscow have vowed to stage protests against the verdict later on Thursday.
  'Almost inevitable'
  Navalny arrived at the courtroom in Kirov to hear the verdict after a 12-hour overnight train journey from Moscow.
  Our correspondent said Navalny smiled in a resigned manner when the almost inevitable guilty verdict came.
  His wife, Yulia Navalnaya, said her husband knew he would get a non-suspended sentence and was mentally prepared to go to prison.
  Navalny was found guilty of heading a group that embezzled timber worth 16m rubles ($500,000; Â£330,000) from the Kirovles state timber company while working as an adviser to Kirov's governor Nikita Belykh.
  The prosecution had asked for a six-year jail sentence, but judge Sergei Blinov decided on five years, and said there were no extenuating circumstances that would warrant keeping Navalny out of prison.
  Navalny's co-accused, Pyotr Ofitserov, was also found guilty, and given a four-year jail sentence.
  "Navalny... committed a grave crime," said Judge Blinov as he delivered the sentence.
  State television has only shown limited interest in the process despite Navalny's prominence, but online the trial has been followed extensively.
  Mr Navalny came to public attention when he inspired mass protests against the Kremlin and President Vladimir Putin in December 2011.
  Profile: Alexei Navalny
  A thorn in Putin's side
  Judge Blinov said he found the testimony of the main prosecution witness, Vyacheslav Opalev, to be "trustworthy and consistent''.
  Navalny insists that Mr Opalev spoke against him out of revenge, because Navalny had recommended he be fired and his company investigated for corruption.
  After the verdict, Navalny tweeted: "So that's it. Don't get bored without me. Most importantly, don't sit around doing nothing. The toad won't get off the oil pipe by itself."
  In his LiveJournal blog on Wednesday Navalny said: "The current authorities are not a big, healthy fish, but rather a bloated fish or Latin American toad, which puffs itself up when it sees danger, with the help of television."
  In an unusual step, the court allowed the whole trial to be broadcast live online.
  He is now one of the key figures of the opposition - a thorn in the side of the political establishment, campaigning against the endemic corruption, our correspondent says.
  Mr Navalny has also coined a phrase to describe the ruling party United Russia that has stuck in everyone's minds - "the party of crooks and thieves".
target: Russian protest leader Alexei Navalny has been jailed for five years, for embezzlement from a timber firm.