Blackman, 39, from Taunton, Somerset, has been told he will spend at least 10 years in prison.
It comes after one of the UK's highest-ranking Royal Marines pledged his "full support" for Blackman, saying he had been "tainted" by the "impact of war".
The Ministry of Defence said it respected the court's decision.
By Jonathan BealeDefence correspondent, BBC News
In the words of his commanding officer, Sgt Al Blackman, the man until recently known just as Marine A, had a proud career and promising future.
That was until a momentary and fatal lapse of judgement that not only prematurely ended the life of the injured Afghan fighter he shot, but also altered his own forever.
His commanding officer said that  Blackman was not a bad man, but a "normal citizen" tainted by the impact of war.
But while the Judge Advocate General said there were mitigating circumstances to this unusual case,  Blackman had treated the injured Afghan with contempt and murdered him in cold blood.
He said his reaction to the murder caught on tape was chilling.
The sentence passed was always going to be  controversial - this was a murder carried out by a man  who was serving his country in a war with a ruthless enemy.
But those who criticise must also reflect that the sentence was approved by a group of Blackman's peers - those in uniform who've also experienced combat.
In the words of Judge Blackett,  it's their reputation too that's been tarnished. While there will be sympathy, there's also anger.
On Thursday, three judges at the High Court lifted an anonymity order allowing Blackman to be named.
Lt Col Simon Chapman, in a letter read to the judge and board at the court martial in Bulford, Wiltshire, described how Blackman's promising career had been shattered in a "momentary" lapse of judgement.
The Ministry of Defence, in a statement, said: "Throughout this case the Ministry of Defence has followed the independent legal process and a sentence has now been delivered.
"We respect the authority and decision of the court and it would be inappropriate of us to comment on the sentence."
The trial - during which Blackman was referred to as Marine A - was the first time a member of the British armed forces had faced a murder charge in relation to the conflict in Afghanistan, which began in 2001.
Two other marines were cleared.
The murder took place after a patrol base in Helmand came under attack from small-arms fire from two insurgents.
One of them was seriously injured by gunfire from an Apache helicopter sent to provide air support, and the marines found him in a field.
Officer's letter defends marine
The incident was inadvertently filmed by one of the cleared marines - known as Marine B - on his helmet-mounted camera. That footage, taken on 15 September 2011, was shown to the court during the two-week trial.
It showed Blackman shooting the Afghan prisoner with a 9mm pistol.
Sentencing Blackman, Judge Advocate General Jeff Blackett told him he had disgraced the name of the British armed services and had put troops' lives at risk by his actions.
"This was not an action taken in the heat of battle or immediately after you had been engaged in a firefight," he said.
"Nor were you under any immediate threat - the video footage shows that you were in complete control of yourself, standing around for several minutes and not apparently worried that you might be at risk of attack by other insurgents."
Blackman was told that when he is released from prison by the Parole Board he could be recalled if he breached the terms of that licence.
In fixing the minimum term of imprisonment, the judge said the court took into account the effect of the arduous six-month tour upon Blackman.
"This was your sixth operational tour and your second to Afghanistan in under 14 years of service," the judge said.
"We accept that you were affected by the constant pressure, ever present danger and fear of death or serious injury.
"This was enhanced by the reduction of available men in your command post so that you had to undertake more patrols yourself and place yourself and your men in danger more often.
"We also accept the psychiatric evidence presented today that when you killed the insurgent it was likely that you were suffering to some degree from combat stress disorder.
"While we acknowledge your personal circumstances and the immense pressure you were under, we note that thousands of other service personnel have experienced the same or similar stresses.
"They exercised self-discipline and acted properly and humanely; you did not."
Royal Marine Sergeant Alexander Blackman has been sentenced to life by a court martial for murdering an insurgent in Afghanistan.