Former News of the World editor Andy Coulson has been found guilty of conspiracy to hack phones.
His predecessor Rebekah Brooks was cleared of all charges in the phone-hacking trial.
Coulson went on to become director of communications for the prime minister, who has apologised and said hiring him was "the wrong decision".
Royals, celebrities and victims of crime were among those whose phones were hacked by the News of the World.
The paper was closed by its parent company, News International, in July 2011 after it emerged that it had instructed a private investigator to intercept - or "hack" - voicemails left on the mobile phone of murdered Surrey teenager Milly Dowler in 2002.
Police say thousands of people's phones were targeted, and BBC legal correspondent Clive Coleman said Coulson's conviction showed a "widespread criminal conspiracy going to a very, very senior level" at the News of the World.
Coulson, who faces a maximum of two years in prison for hacking, and former News International chief executive Mrs Brooks were among seven defendants on trial at the Old Bailey.
The verdicts in full are:
- Andy Coulson was found guilty of a charge of conspiracy to intercept voicemails
- Mrs Brooks was found not guilty of conspiracy to hack voicemails, two counts of conspiracy to pay public officials and two counts of conspiracy to pervert the course of justice
- Former News of the World managing editor Stuart Kuttner was found not guilty of conspiring to hack voicemails
- Cheryl Carter, Charlie Brooks and News International's former head of security Mark Hanna were cleared of conspiracy to pervert the course of justice
The jury will return on Wednesday to continue considering charges of misconduct in public office against Coulson and former News of the World royal editor Clive Goodman.
By Peter Hunt, BBC News
Rebekah Brooks and Andy Coulson were once colleagues, lovers and close to the prime minister.
Now a jury of eight women and three men - chosen at random and on the evidence before them - have delivered these two defendants two very different fates.
Coulson showed no emotion and stared straight ahead when he learnt that the jury had found him guilty of conspiracy to hack.
The full consequences of his actions have finally caught up with him and he faces the prospect of a prison sentence.
In stark contrast, Mrs Brooks - standing close by in the dock - smiled as the jury foreman returned the first of four not guilty verdicts.
She held the hand of her former assistant, Cheryl Carter, as she too was found not guilty.
As a teenager, Mrs Brooks swept the floors and made the tea at the Warrington Guardian.
As an adult, she ran one of Rupert Murdoch's companies.
Now, after three years in limbo awaiting this trial, Mrs Brooks can resume her life.
An emotional Mrs Brooks had to be taken away by the court matron on hearing the verdicts.
Coulson - who was News of the World editor from 2003-07 then worked for the Conservative Party from 2007 and became the PM's director of communications after the 2010 election - stood with his hands behind his back and showed no emotion.
Mrs Brooks appeared to mouth "thank you" to the jury and also held the hand of her former personal assistant Cheryl Carter, who looked close to tears.
Mrs Brooks's husband Charlie also showed little emotion.
The charges of conspiracy to pervert the course of justice against Mr and Mrs Brooks, Ms Carter and Mr Hanna related to July 2011.
Mrs Brooks was accused of retrieving boxes, with the help of Ms Carter, from the News International archive relating to her time as editor of the News of the World and the Sun.
She was also accused, along with her husband and Mr Hanna, of hiding personal computers from the police.
The phone-hacking investigation found numerous allegations relating to the period between 2000 and 2006.
In court the jury heard:
- Kate Middleton's phone was hacked 155 times by Mr Goodman, who was previously jailed for hacking
- Mr Goodman also hacked Prince William's phone 35 times and Prince Harry's on nine occasions
- Coulson said "brilliant" when a reporter played him a hacked voicemail left for James Bond star Daniel Craig by actress Sienna Miller
- Coulson told a journalist investigating a story on celebrity Calum Best to "do his phone"
- former England football manager Sven-Goran Eriksson's phone was repeatedly hacked
Jurors also listened to recordings of voicemail messages left by former Labour cabinet minister David Blunkett.
Former Home Secretary Mr Blunkett has told the BBC revelations about his private life in the News of the World almost caused him to have a nervous breakdown.
"The honest truth is I don't know how I managed to continue doing the job in the way I did," he said.
Five other people have already pleaded guilty to conspiracy to hack in relation to the charges faced by Mrs Brooks and Coulson.
Glenn Mulcaire, a private investigator, former news editors Greg Miskiw and James Weatherup and reporters Dan Evans and Neville Thurlbeck had previously admitted their role in the plot to get stories by intercepting voicemails.
The investigation found that Mulcaire had been tasked to obtain private information by hacking mobile phone voicemails to uncover leads for stories.
Police estimate that he targeted approximately 5,500 people and that at least 1,000 of them were "definite victims".
Police have told 3,500 people that their names featured in notes that Mulcaire kept of his work for the News of the World.
Speaking after the verdicts were delivered, Mr Cameron said he took "full responsibility" for employing Coulson and was "extremely sorry".
Labour leader Ed Miliband said the government had been "tainted" by the appointment of Mr Coulson.
"I think David Cameron has very, very serious questions to answer, because we now know he brought a criminal into the heart of Downing Street," he said.
Other politicians and celebrities have reacted to the verdicts.
Labour MP Ben Bradshaw tweeted: "Coulson verdict another damning indictment of Cameron's terrible, terrible judgement."
Sienna Miller, who gave evidence during the trial via video link from the US, told ITV about phone hacking: "It happened, it's really unfortunate and it does make me incredibly angry but I do feel like justice is being done."
News UK, formerly known as News International and part of Rupert Murdoch's News Corp, said in a statement: "We said long ago, and repeat today, that wrongdoing occurred, and we apologised for it.
"We have been paying compensation to those affected and have co-operated with investigations.
"We made changes in the way we do business to help ensure wrongdoing like this does not occur again."
Brian Cathcart, of campaign group Hacked Off, which represents hacking victims, said: "For years the Murdoch press clung to the story that one rogue reporter was responsible for phone hacking. We now know this was a lie."